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Fighting to keep your full 401(k)

On Behalf of | Sep 5, 2020 | property division |

Past posts on this blog touched upon the fact that your 401(k) becomes subject to property division in your divorce. Having to divide that account up with your ex-spouse may drastically impact your retirement plans in Michigan. The potential of such an impact is often enough for potential clients to ask us here at Eisenberg & Spilman, PLLC if there is anything they can do to retain the full of their 401(k) in their divorce.

If you share the same question, it will likely come as welcome news to know that it is possible. Yet given some of the implications of such an action, you should carefully consider your options before committing to a decision.

Convincing your ex-spouse to relinquish their stake

According to the 401(k) Help Center, you can approach your ex-spouse with the proposal of them relinquishing their stake in the contributions made to your 401(k) during your marriage. The trade-off, however, is that you will most likely have to forego your claim to another marital asset of equal value. Keep in mind that if you present this proposal, the value of their portion of the assets reflects their future potential value (after taking into account the possible growth over time from investment returns and interest). This may mean that you must give up much more right now than you anticipate.

Is it worth it?

The question of whether such an action is worth it may depend on how far you are from retirement. If you are only a few years from retirement age, then the added growth those funds may see will likely be minimal, making their estimated future value closer to what it presently is.

You can discover more information on marital asset distribution by continuing to browse through our site.