Getting divorced means a lot of changes for you and your spouse. Whether it be managing who gets custody of the children, who gets the house, or more. Plenty of changes come into the fold after a divorce, and preparing yourself for those changes means dealing with the least backlash from the divorce. Remember, divorce happens all of the time in the United States. Unfortunately it remains a common part of life for many people. You must not be embarrassed about your divorce, but you also must put yourself in the best position to succeed moving forward. For that to happen, understanding the financial component of your divorce holds key. Finances play a big part in your present and future, so knowing where you stand makes a significant impact. You may wonder what happens to your pension and 401K during a divorce, for example.
This question exists as one of the most popular ones among divorcees. Splitting finances seems like a major headache, and even convinces some couples not to get divorced at all. However, you must know options exist at your disposal. Rather than feeling like your financial future is up in the air, using the options afforded to you will put you in the best place. How do you know what to do going forward? There are attorneys to help you with the process. However, when it comes to your pension and 401K, knowing the most yourself helps as well.
What Happens to Your Pension and 401K During a Divorce
How Is Your 401K Split Following A Divorce?
One major question following a divorce comes in regards to the splitting of your 401K. Your 401K could very well be the most significant asset in marriage, so splitting it in the most ideal way holds crucial for your happiness with the process. However, many do not know how the process works. The splitting of the 401K process consists of three parts. The first part includes actually getting divorced. For any of this process to work, the divorce filings must all be in order. Your attorney and you must make sure you have officially requested the divorce to move forward. Next, your attorney must write up a qualified domestic relations order, commonly known as a QDRO. This informs the necessary parties of your 401K so you can continue on with the process of splitting it.
Next, a family court judge must sign off on the document. The plan administrator must also approve of it for the process to work efficiently. The document effectively labels your ex spouse as a payee, or someone other than you who can receive payment from your 401K. As for your spouse, they own three options regarding the 401K. They can move the proceeds into their retirement plan, share her plan with yours, or simply take a cash settlement in the immediate. The different options can be worked out between the two of you and your respective attorneys.
How Do You Split Your Pension Following A Divorce?
The next question covers your pension, another crucial part of your divorce. No one wishes to see their pension mishandled, so knowing the ins and outs of the law helps to avoid that as well. A pension earned during marriage generally gains consideration as a joint asset of both married parties. This means that the state court decides how pension assets should be divided, based on numerous factors. Most of the time the pension receives splitting through a payment plan. However, you and your attorney must be prepared for numerous possibilities.
How Can An Attorney Help Me Figure Out Splitting My Pension and 401K?
As you can tell from the information listed, plenty demands coverage when it comes to your pension and 401K. The divorce process already takes a toll on even the strongest of people. Thus, adding worries about your pension and 401K must not happen. Rather than attempting to take on the legal process on your own, bringing aboard an expert in the field serves a significant purpose in your divorce. Not only will they take the stresses of attempting to navigate the system off of your plate, but they will also help guide you through any potential hiccups that come in the process. You want the most money out of the splitting of your pension and 401K, and possessing the help of someone trained in earning you that money will assist you in the most optimal way.
Remember, plenty of documents need filling out and signing through the process. Whether you go through the three-step process of splitting the pension and 401K, or you end up on the receiving end and must choose between the options for receiving payment. Regardless, breaking down your options in an individualized manner with an expert goes a long way towards ensuring you receive what you deserve.