401k distribution in divorce settlement differs from one state to the next and from one situation to the next. There are numerous rules that must be followed in order for this type of disbursement to occur. These rules are in place to help prevent anyone from illegally tapping into these retirement accounts when they are otherwise not authorized to do so. Though a split of assets must be considered, it is often possible to avoid disbursements of your 401k if you arrange an agreement with your spouse.
If you are divorcing, there are various options and factors that affect the amount of money you will lose from your 401k to your spouse. The funds are divided based on your state’s martial rights as well as the overall size of your estate. In some cases, you may not have an option but in others, you can work with your spouse to find a solution to the situation. Keep the following in mind:
As you consider your options for splitting your 401k assets, do discuss your options with an attorney. The attorney can help you to save as much as possible.