We received a question yesterday:
Do I have to Split my 401(k) in Divorce?
The quick answer is yes – but that isn’t entirely true. You see there are many different options to explore before you simply say yes.
Let me explain.
The general answer is that you have to divide your 401k or retirement plan.
Is it a 50/50 split?
In Utah, we follow the Woodward formula. This essentially means that a spouse is entitled to receive one-half of the increase of a retirement account.
Let me give you an example.
If you were married for 20 years and your 401k account increased $100,000 then your spouse will get half of the increased amount if you were to get divorced. In this case, that would be $50,000.00.
If the account when down, then you might not have to pay anything to your spouse because there was no increase.
You actually should speak with an attorney on these types of issues because they are important and you want to protect your rights.
The reason I said maybe above is because maybe you don’t have to split your 401(k) account.
Watch this video for more information:
As you can see after watching the show, you can negotiate the terms of your divorce case. This can be done directly with your spouse, where you agree on all of the terms of the decree or you can attend mediation.
When you do a mediation with an attorney from our office, you will go into a separate room and your spouse goes into a separate room. This is also called shuttle mediation. The mediator is an independent third party negotiator. The mediators we use are trained and some are former judges. The mediator goes back and forth from your room to your spouses room and attempts to get both parties to settle and agree on an outcome in your case.
Most of the time, mediation is successful. If some issues are not resolved in mediation, then those issues can go to court.
Usually, we have clients negotiate for the things that are most important to them. For example, if your 401K plan is the most important thing to you; then it might not be the most important thing to your spouse. You can offer your spouse what they want so you can get what you want. This doesn’t always work, but it can be an effective strategy to employ in mediation.
That’s why I think its a maybe – because sometimes using the tools available to you, you can win.
If you attend mediation with a lawyer, you will be able to protect your rights and usually get the things that are most important to you in your divorce.
When you go to mediation, don’t just focus on your most important item. Be sure to also address credit cards, debt, child support, alimony, cars, the house, child custody, etc. Don’t leave anything out. The more you can take care of, like your retirement account, the better you are.
Remember, no one gets divorced in a minute or in a day. There is at least 3 months you have to wait, so during the waiting period, go to mediation and protect as much of your 401(k) as possible.
We do offer a free initial consultation on family law issues – so if you are getting divorced, or know someone who is, send them over by having them call us at 801-676-5507.
Ask us questions and we’ll answer in a blog post or video post.
Come back soon.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 876-5875
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As of December 7, 2016.