Your wedding vows stated you would stay with your partner “for richer, for poorer.” Now you find yourselves in the middle of a divorce and fighting over every penny.
You were not thinking of divorce while falling in love, so it is likely you did not take steps to protect your 401(k). Your retirement account is one of your most valuable assets. Now you are wondering if you will have to split it with your spouse.
How your 401(k) is vulnerable
At least part of your 401(k) is open to a claim by your spouse unless you have a prenuptial agreement. Otherwise, a court decides how to divide your retirement savings. The general rule is that your spouse can stake a claim to any money added to the account during your marriage.
At the same time, you may have a right to your spouse’s 401(k). You are eligible if you contributed to her or his account.
Whatever happens, you should be 100% honest about your assets. A judge who thinks you are hiding assets, even if it is an innocent mistake, may award more money to your spouse.
How you can protect your 401(k)
You can choose to bypass court and negotiate with your spouse. This usually works if you still have an amicable relationship. The process has advantages because it takes less time and is not open to the public. The agreement is subject to the approval of a judge.
The process gives you more control because you do not have to abide by strict legal procedures. You are, in effect, making up your own rules.
Whatever route you take, the issues are complex. In Pennsylvania, the rules vary from one county to the next.
How you can protect your future
Your divorce is your first step toward a happier life. While no one says it will be easy, you can make the process work in your favor.
The experience is complex, both from legal and emotional points of view. Armed with the right information, you can make smart decisions.