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Can you keep your full 401(k) in your divorce?

On Behalf of | Feb 19, 2021 | Property Division |

Past posts on this blog touched upon that the fact that your 401(k) account becomes subject to property division during your divorce proceedings in Texas. You likely thought that the only impact your divorce would have on your retirement would be who you might spend your golden years with. Yet given that you (like many people) likely view your 401(k) as one of your primary sources of income during your retirement, you no doubt have concerns about how losing any portion of it to property division will impact your plans. 

What if you could retain your full account? Is this even possible, and if so, at what cost? Would the required financial sacrifice on your part ultimately be worth it? 

Keeping your full 401(k)

Retaining the full amount of your 401(k) account in your divorce is an option. However, according to the 401(k) Help Center, to do so, you have to convince your ex-spouse to relinquish their interest in it. Doing this will likely require that you agree to give up your stake in another marital asset of comparable value. Otherwise the court will issue a Qualified Domestic Relations Order authorizing your 401(k) plan provider to divide your account into two (with you and your ex-spouse then assuming control of your respective funds). 

Determining if fighting for your full 401(k) is worth it

Before you fully commit to fighting to keep your full 401(k), your should know that by doing so, you may have to give up more than you realize. The court values retirement assets at their potential future value (not their current worth). Thus, if you are several years from retirement, that money has plenty of time to grow. You need to consider whether the benefit of keeping your retirement plans intact merits making a significant financial sacrifice now. 

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