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How Will Your 401(k) be Handled in a Divorce?

On Behalf of | Jan 8, 2020 | Divorce

How will your 401(k) be handled in a divorce in Carlsbad, Oceanside, Encinitas or North County San Diego?  Retirement assets such as a 401(k) are considered in the same manner as “community property” and marital contributions are usually fairly or equally divided between the parties.

If you entered the marriage with a balance in your 401(k) the “community property” value of the 401(k) itself can actually be quite legally complex.  There will be an analysis of the marital funds or income during the marriage which was contributed to the account.  In cases of mismanagement or questionable or over-aggressive investment there may be legal issues which are greater than the simple difference in balance between the date of the marriage and the date of separation.

The other important aspect of a 401(k) in a Carlsbad divorce is the legal instrument which divides the actual account.  The judge in the case may order the account to be equally divided between the parties.  This order, on it’s own is not enough to accomplish this.  A “Qualified Domestic Relations Order” or QDRO is required by the administrator of the 401(k) plan.

The QDRO must often follow a specific template or structure established by the plan itself and must be approved before an account can be divided.  There are questions of whether each party will maintain their separate 401(k) accounts or if one party intends to liquidate the asset resulting in a substantial taxable event.

How will your 401(k) be handled in a divorce and what can you do to protect your interests?  Our Certified Family Law Specialists provide insight and effective strategies for protecting important assets in a divorce.  We invite you to review the recommendations of our clients and the legal industry and contact us or call 760-389-3927 to schedule an appointment with one of our attorneys.