On behalf of Stange Law Firm, PC posted in divorce on Monday, July 22, 2019.
Property division proceedings can often be the most confusing aspect of your divorce case in Wichita, particularly when it comes to the handling of complex assets such as retirement accounts. Many clients have come to us here at the Stange Law Firm PC questioning why their individual 401k account is even considered a marital asset. If you share the same question, it is important to understand that your entire 401k may not be subject to property division; rather, only those funds contributed to it during your marriage can be divided in a divorce.
Even knowing this, however, you may be less than enthusiastic about splitting up your retirement assets with your ex-spouse (after all, they are the result of your individual effort). Per The 401k Help Center, you can potentially retain the full value of your 401k in your divorce by relinquishing your claim to another marital asset to your ex-spouse. If you are considering this option, however, you need to understand the process that goes into determining the actual current value of those funds.
Say that $50,000 was contributed to your 401k during your marriage. The actual value of that has to consider both the tax implications and the potential growth those funds may experience through interests and investments if left in a retirement account. The tax liability would be subtracted from the $50,000, and then potential earnings added to come up with a current value. Thus, rather than asking your ex-spouse to forgo $25,000, you may actually be asking them to give up much more. The court understands this and thus may ask you to give up your share in an asset of comparable value (which ultimately may or may not be in your best interest).
More information on dividing up assets in a divorce can be found throughout our site.