How Can Divorce Affect My 401k?
Funds in your 401k or other retirement accounts are subject to the rules of equitable division in Gwinnett County divorce proceedings.
Going through a divorce is never easy. Even if both you and your spouse agree to end the marriage and are on relatively amicable terms, matters dealt with in Gwinnett County divorce proceedings have the potential to impact you for years into the future. This is particularly true when it comes to dividing marital property and assets, including funds in your 401k.
How Retirement Accounts are Divided in a Georgia Divorce
Under the Georgia Code, any property or assets earned, acquired, or accumulated over the course of your marriage will need to be divided between you and your spouse. This includes pension benefits and funds in retirement accounts, such as a 401k.
Rather than splitting everything evenly, the court aims to divide marital property on a fair and equitable basis. Factors that will determine what portion each spouse is entitled to include:
- The length of the marriage;
- Each spouse’s individual income and earning potential;
- The amount of premarital property and assets each possesses;
- Each spouse’s contributions to acquiring property and assets;
- Whether one spouse gave up their own career or education for the sake of the marriage.
In addition to dividing assets, any debts incurred during the marriage will also need to be portioned between the spouses. Liability for withdrawals made from retirement accounts will depend on whether both parties agreed to borrow the money and whether it was used for marital or nonmarital purposes.
Retirement Accounts and Divorce
If you were the primary breadwinner during your marriage and part of your income went to a 401k or other retirement account, your spouse may be entitled to a portion of these assets. The exact amount will depend on the above factors as well as the outcome of negotiations between each party and their divorce attorneys.
There are several important issues that should be considered during divorce negotiations in which retirement benefits are an issue. This includes:
- The total amount of property and assets each party is entitled to in the divorce;
- The total amount of debts the couple owe;
- Whether they wish to trade their rights to retirement benefits for a larger portion of other property, such as the family home;
- Any Internal Revenue Service (IRS) tax implications they are likely to face due to taking a payout from a 401k and whether they will roll these benefits into another retirement account.
They will also need to make a point of obtaining a Qualified Domestic Relations Order (QDRO) from the court, which is required by 401k administrators before making distributions can be made.
Discuss Your Case with Our Gwinnett County Divorce Attorneys
At Zimmerman & Associates, we provide the professional legal representation you need to protect yourself and your assets when going through a divorce. To discuss your rights concerning a 401k and other retirement accounts, contact our Norcross divorce attorneys and request a consultation today.