If you’re considering divorce, you may wonder whether your 401k is marital property and if you will lose any of that retirement money to your soon-to-be ex-spouse.
Family Law Attorney James Townsend explains when a 401k is marital property.
Questions About Your Retirement Funds & Divorce?
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No one enters a marriage with the idea of ever getting a divorce. Sometimes, though, couples grow apart, extramarital affairs happen, or someone becomes abusive, which prompts an end to the marriage.
Among the many issues divorcing couples have to work out is the division of marital property, also called marital assets. Homes, cars, and money in the bank can all be marital assets. But what about your retirement accounts? More specifically, retirement accounts you held before you were married?
When Your 401k is Marital Property
People often don’t know where their retirement funds fall into the mix of a divorce. Whether your 401k is marital property depends. That’s probably not what you wanted to hear, but we’ll explain.
Breaking it Down
Money that is accrued during your marriage will be marital property.
Now, let’s get to that 401k you had before you got married. Any amount of money that was in the 401k up until the date of the marriage will be your separate property.
Depending on your specific circumstances, that may be a relief to you. It’s important to note, though, that the increase in the value of that 401k during the marriage is going to be joint property.
Exceptions To The Rule
As with everything, there are always exceptions. Whether your 401k gets raided in the divorce can also depend on your debts and other assets.
It’s always advised to talk to a divorce attorney about dividing retirement accounts. They can guide you through the process to ensure you complete the appropriate paperwork to avoid penalties and taxes.
One of our experienced attorneys can answer your questions about the law regarding divorce in Colorado and help you along the way.
Schedule a free consultation when you call 303-688-0944, or click here and schedule online.