Generally, when a couple divorces, they generally have access to a marital share of retirement accounts. However, many individuals rely on these savings to financially support themselves when they are no longer employed. As such, it’s crucial to understand how you can protect your retirement plan during a divorce to ensure your financial security. Please continue reading to learn how to protect a 401 (k) in a New York divorce and how a knowledgeable Suffolk County Marital Property Attorney can help protect your financial assets.
How Are 401 (k)s Split During a New York Divorce?
Firstly, a 401 (k) plan is a workplace retirement plan that allows you to make annual contributions up to a specific limit and invest that money. Essentially, it will enable employees to defer receiving a portion of their salary, which is instead contributed on their behalf, before taxes to their plan.
In New York, marital assets are subject to equitable distribution. This means any assets accumulated during the marriage must be divided fairly, considering the circumstances of the case and the parties involved. Ultimately, any funds contributed to the 401 (k) account during the marriage are considered marital property and would be subject to division. If one spouse has significantly more savings than the other, the court could order the spouse with more savings to give a portion to the other. However, this doesn’t necessarily mean you must liquidate your 401 (k) and provide it for your ex.
Nevertheless, dividing retirement accounts is typically one of couples’ most complex issues. It’s important to understand that some retirement accounts can only be divided with a particular order called a Qualified Domestic Relations Order (QDRO). This allows the non-employee spouse a share of the plan benefits.
How Can I Protect the Funds in My Retirement Accounts?
Constructing a prenuptial agreement is the most effective way to protect your 401(k) benefits. A prenuptial agreement can include provisions that explicitly address how the assets and debts will be divided between spouses should the marriage end. It’s important to understand that it may be possible during negotiations to offer something else to your ex in exchange for the funds from your 401 (k).
Divorces take an emotional and financial toll. As such, it’s in your best interest to enlist the help of a dedicated Suffolk County divorce & separation attorney who can help you understand your legal options. At The Law Offices of Susan A. Kassel, P.C., we are prepared to help you safeguard your assets. Contact our legal team to learn how we can effectively represent your interests.
