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

Past posts on this blog touched upon the fact that retirement assets are subject to property division during your divorce in Georgia. After several years of contributing to your 401(k) (with the expectation that those funds will help fund your retirement plans), such news may cause quite a concern.

Typically, the court issues a Qualified Domestic Relations Order in your case authorizing your 401(k) plan provider to make disbursements to an alternate payee (in this case, your ex-spouse). This paves the way for the division of your account. Yet might it be possible for you to negotiate to keep your full 401(k) (and thus keep your retirement plans intact).

Keeping your full 401(k)

According to the 401(k) Help Center, you can try to keep your entire 401(k) in your divorce, yet not without the cooperation of your ex-spouse. They would have to agree to forego their stake in your 401(k). In order to do this, you would likely need to relinquish your interest in a marital asset of equal value.

Determining whether it is worth it

While this seems like a simple proposition, it may be somewhat more complex than you realize. When you ask your ex-spouse to give up retirement assets, the court values those assets at their potential future value (after potentially years of growth through investment returns and earned interest). This means that you may have to give up more right now to keep your full 401(k) than you realize. Whether this immediate sacrifice is worth it compared to the benefit of keeping your retirement plans intact is something to consider before committing to this action.