Dividing up a 401k in your divorce

On Behalf of | Jan 9, 2020 | property division | 0 comments

Depending on the circumstances surrounding the end of your marriage in Louisville, your divorce may come as a welcome relief. What you may not welcome, however, is the financial uncertainty that it may bring (particularly if you were not the primary income earner in your marital home). Most in your situation come to us here at the Gibson Law Offices believing that they will be able to rely on spousal support to assist them in maintaining the quality of life they enjoyed while married. There are just two problems with that assumption: spousal support is not an automatic benefit in a divorce case, and while it may help you over the long-term, it may not adequately address any immediate financial concerns you may have.

Those can include affording housing or paying for your kids’ support (or your own vocational training). There may, however, be a source of immediate financial assistance available to you: your ex-spouse’s 401k. The contributions made to such an account during a marriage are subject to property division. Typically, withdrawing any funds from a tax-deferred retirement account prior to actually reaching the age of retirement will incur a tax penalty, yet according to information shared by, divorce is one of the few scenarios where you can indeed make such a withdrawal without being penalized.

Yet before making plans to cash out your portion of your ex-spouse’s 401k, you should carefully consider the pros and cons of doing so. Withdrawing the money now means that you give up the potential it has to earn any retirement income for you through investment and earned interest. You need to decide if your need for immediate funds outweighs that potential long-term benefit.

You can learn more about dividing up your marital assets by continuing to explore our site.

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