How divorce may affect retirement savings

On behalf of Stange Law Firm, PC posted in Divorce on Thursday, December 26, 2019.

Going through a divorce can be challenging. If the emotional difficulties are not enough, there are also financial issues that arise as well. Missouri residents who have been saving for retirement may wonder what will happen to these savings if they get a divorce. Here are a few basic things a person can expect.

The first consideration are the steps that were taken prior to the marriage. If a prenuptial agreement was signed, what will happen with a person’s 401(k) will go by what was laid out in the agreement. If no prenuptial agreement was signed, a spouse is entitled to at least some of the 401(k).

Income that is added to a retirement account during the marriage is looked at as marital property. This includes money that is added by the individual or their employer. Retirement accounts are often divided during a divorce, but various factors are taken into account, including how much each individual earned during the marriage.

Some individuals have used a Qualified Domestic Relations Order during the divorce process. This is a court issued document that allows one spouse to go to the other spouse’s employer in order to be sure that they get part of the retirement account. This order allows the administrator of the retirement account to move money from the retirement account without either spouse being penalized.

It is good for individuals to learn as much as they can about how divorce will affect their finances. Some have turned to an attorney to have their financial and legal questions answered when it comes to property division and how their 401(k) will be divided during a divorce. The lawyer might also answer questions about what is likely to be considered marital property and how debts may be shared.

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