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Can you keep your full 401(k) in your divorce?

On Behalf of | Oct 15, 2020 | Firm News |

As you enter into your divorce proceedings in Michigan, you may feel prepared for any of the issues that may arise. Yet if you are like most, the knowledge that your 401(k) is suddenly subject to equitable division likely catches you by surprise. Yet a further review of this fact may make this decision more clear: as the contributions made to such an account during your marriage come from marital income, it makes sense that the court would view those contributions as marital assets.

Yet that knowledge may not change the fact that having to divide up even a portion of your 401(k) might have a significant impact on your retirement plans. This then prompts the question of whether you can keep the full value of your 401(k) in your divorce.

Keeping your entire 401(k)

According to the 401(k) Help Center, you can indeed attempt to retain your full 401(k) during your divorce proceedings, yet doing so will require the cooperation of your ex-spouse. They will need to agree to forego their stake in your 401(k). Why might they do this (or, more specifically, how might you convince them to do so)? By relinquishing your interest in another marital asset of equal value, you might be able to convince your ex-spouse to allow you to keep the full value of your 401(k).

Determining whether fighting for your full 401(k) is worth it

Giving up on another marital asset in order to retain your entire 401(k) might seem well worth it, yet you should carefully consider this course of action before pursuing it. The court values the amount you ask your ex-spouse to give up in this scenario at their potential future value (taking into account growth). This might require you to give up more now that you anticipate.