What Happens to My 401k?
There are moments in life when you just know you’re an adult. Finding out, not only that your new job offers a 401k, but learning what a 401k is to begin with, could certainly count as one of those moments. As life moves forward, many more of these learning experiences will come and go. Unfortunately, one of them might be divorce and it’s a big one. You linked the sum total of your assets with those belonging to another. That was serious enough. Now, you must assess what has become of the enterprise and decide how it will be divided. Your 401k is part of the process.
New Jersey is an equitable distribution state which means that the court will seek a fair outcome based on certain factors, rather than simply divide everything down the middle. This is how marital property is determined. Everything contributed to your 401k during the marriage is marital property. It is fairly simple math. It starts with the date of marriage and ends with the filing date of the Complaint for Divorce. All contributions made between these two dates equals the value of the marital portion of your 401k. If there are no exceptional circumstances, you each receive half of the marital portion, plus or minus any gains or losses in the value. Sometimes, one party may use his or her share in the 401k to offset other assets or liabilities.
A 401k is an easy example of one type of asset that is subject to equitable distribution, but keep in mind, there are other types of retirement accounts in addition to 401k’s, such as pensions, IRA’s, etc. Also, there are many other types of assets, not just retirement accounts, which need to be divided during a divorce.
The institution of marriage may be seeing its share of redefining in the 21st century. What every marriage has in common is that while the idea has been around for a millennia, the two individuals have been around for far less and together for even less than that. Merging two lives can be messy and complicated. As you can imagine, permanently separating those same two lives, as sad as it may be, can be just as messy and complicated. When even custody of the dog can warrant its own trial, it is safe to say that the matter of retirement accounts will more than likely require a conversation with a professional.