A 401k retirement account is often overlooked during divorces as they are not necessarily deemed as martial at first. 401k’s can, however, be seen as martial, especially if you and your spouse have contributed to it over time. If you care about the money in your 401k, it is important to fight for it in the divorce. Here we will be explaining how to deal with and protect your 401k during your divorce in Shiloh, IL.
The Process of Handling a 401k in a Divorce
When you have a 401k account in your divorce, you need to hire an investment plan administrator. It is also highly recommended to consult a family lawyer and an accountant as well. The first step taken is dividing up the 401k through the final divorce judgment. After that, either that account holder or the family lawyer will draft a Qualified Domestic Relation Order (QDRO) which explains how the assets are going to be divided up. This will also list the non-owner spouse as an alternative for receiving the 401k. They can either receive the funds in the retirement plan through cash, they can add the funds to their own retirement plan, or they may leave the amount with the spouse who owns the 401k and they can receive a part of it when the owner retires.
Receiving Those Funds
The selected way of receiving the funds needs to be explained in the QDRO and the non-owner needs to understand the risks. For example, if the owner dies before their retirement, the non-owner could lose out on all benefits they were planning on receiving. The QDRO then has to then be approved and signed by the plan administrator along with a family court judge.
Protecting Your 401k
Understanding your rights to protect your 401k in your divorce in Shiloh, IL is important for keeping your funds safe. Knowing how the process of division is decided is an important first step. Some may not like that it gets divided and given to their ex-spouse. Sometimes this is unavoidable, however, there are ways you can protect your 401k. Before you get married, you can have a family lawyer draft a prenuptial agreement for you. This will help establish what is marital property and was is not in your marriage.
When this is done, the marital property is divided while the non-marital property is not. You can have a family lawyer create a prenuptial agreement, which states that the 401k will not be considered marital property, and thus it will not be divided during the potential divorce. It is also important to remember that if your 401k was created before your marriage, depending on the laws in your state, your 401k could be excluded from your divorce. This means, as the owner, you will receive all of the funds and it will not be divided. Be sure that you keep detailed records so that way its value before your marriage can be seen.
If you have any more questions about 401ks during your divorce or need assistance protecting your 401k in Shiloh, IL, give our expert team over at the Law Offices of Robert Elovitz a call today!