When it comes to divorce, the division of assets depends on the specifics of each case as well as state law. Because Florida uses the equitable distribution method, courts distribute assets — including 401(k) accounts — in ways judges believe are equitable or fair.
The following options are common ways of dealing with a 401(k) account in a divorce:
- Keep your 401(k) and your spouse receives other marital property of similar value. This option demands thorough research and careful financial calculations. Among other factors, think about the values of the assets and your long-term tax consequences.
- Split your 401(k) with your spouse. This option requires a court order and takes time. If you choose this path, share the specifics of your 401(k) with an attorney and begin the drafting process early to allow time for it to be accepted as part of the divorce settlement.
- Liquidate a portion of your 401(k) to give your spouse a lump sum. This option is unattractive to many because of the tax consequences. However, in some situations, it is necessary to liquidate to maintain a separate household during divorce proceedings or to pay off certain types of debt.
- Roll a portion of the 410(k) into an IRA for your spouse. If you are eligible for this option, the rollover allows you to remove your spouse’s share without any penalties or tax liabilities.
- Keep your individual 401(k) and your spouse keeps his/hers, if you both have one. Some couples take a simple approach by keeping individual 401(k)s, preventing the need to divide these accounts during a divorce.
As you go through a divorce in Florida, work with an experienced family law attorney to help you navigate complex issues like 401(k)s and other retirement accounts. The Tampa divorce lawyers at the Law Offices of K. Dean Kantaras can provide assistance in this area.