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Divorce affects 401(k) savings

| Dec 26, 2019 | Divorce |

In addition to being difficult to cope with emotionally, dissolving a marriage can pose financial challenges. Naturally, people in San Antonio might wonder how divorce will affect their retirement savings. Here is a glimpse of how courts handle the splitting of retirement funds during the divorce process.

For starters, two people who are getting divorced need to consider the steps they took before walking down the aisle. Specifically, did they take time to draft a prenuptial agreement? If a prenuptial agreement is in place, it will determine how their retirement funds will be handled during the marital breakup. However, if no such agreement has been established, then one spouse’s 401(k) must be split between the two parties.

Any money that a person puts in his or her 401(k) during the marriage is considered to be marital property. For this reason, it must be split between the two spouses. This money includes any funds that the person added from his or her paycheck regularly, along with the money that the employer adds to the 401(k). A judge will ultimately decide how much of the 401(k) that each spouse will receive, taking into consideration how much both of them contributed to the marriage financially. Thus, the retirement fund split may not end up being 50/50.

The ideal scenario during divorce is for both parties to address property division through informal negotiations or mediation, for example. The reason for this is that these processes are generally a lot less stressful and less costly than going through traditional divorce litigation. An attorney in San Antonio will help a divorcing spouse to pursue a comprehensive settlement with the other party while keeping the client’s best interests at the forefront of the divorce proceeding.