Should I stop depositing into my 401K?

Available_Phase775 · 2024-09-07T23:15:53+00:00

I had to split my 401(k) with my ex. I was able to show how much money I had from the day I got married until the day I filed for divorce, and that amount was split 50/50. The money I had before marriage did not count; only the money I earned during the marriage.

AirSailer · 2024-09-07T11:35:49+00:00

I'm in the US. I just checked my QDRO, the amount was split when the divorce was finalized. The QDRO was drafted and signed almost 30 days after the divorce was finalized. I stopped making contributions into my 401k right before I filed for divorce, on the recommendation of my lawyer.

Date of Marriage: The Participant and Alternate Payee were married on February 1, 2008 and were divorced on January 8, 2021.

Amount to be Paid to the Alternate Payee: The Alternate Payee's interest in the plan shall be 50% of the Participant's account balance as of January 8, 2021 including the value of any outstanding loan balance as of such date. Such interest of the Alternate Payee shall be adjusted for loses and gains subsequent to January 8, 2021

I changed the dates above to not expose personal info

bungleweed · 2024-09-07T09:29:00+00:00

I got a bit screwed by this in my divorce but this was in UK not America. Rather than an amount in terms of £/$ a percentage was agreed. So when the pension sharing order actually eventually happened after the final order half the money paid into my pension since the separation date went to her, like 12 months of extra pension payments. It was a lot as I’d had a good year at work! That could be worse as often these things can drag on, 12 months wasn’t too bad compared to some.

So my advice would be talk to your lawyer and see if you continue to pay into your pension/ 401k after separation if you’ll keep all that or if she’ll get X % of those payments. It’s probably the latter in the states knowing how the divorce laws work! In the UK it could be different. You could see if you reduce your contributions if there’s somewhere else you can put that money that would legally be deemed outside of the shared assets. Or open a new pension / 401k that could then not be deemed a shared asset as it’s a new asset post separation. Not sure if that’s allowed legally but worth asking your lawyer / solicitor about.

Really what should happen is they should value the pension at the time of official separation and that should then be what’s shared at that time, then any extra contributions you make post separation should not be included in the calculations.

I wish I’d opened a separate pension account and paid my contributions into that post official separation date. Would have saved me about £30k as it would not have been included in the shared assets. Shame my solicitor failed to tell me that at the time.

Also in the UK my solicitor informed me they can only claim against your pension from when you officially married. So if you had pension savings from before that date, they should not be claiming a proportion of those. Was good for me as I had a sizeable final salary pension built up pre marriage. So that was deemed out of scope.

Posting this for others who may not have realised this can happen so they do ask at least the question to their legal counsel!

Dependent_Lake_6780 · 2024-09-07T06:56:37+00:00

It is a lenghty process by an actuary who will determine her portion. All gains after DOS are yours. It is called a QDRO as someone else mentioned. If anything, increase your contribution now that you are likely saving money. The goal is to contribute as much as possible, especially in this season of growth you are entering.

Sea_Examination_120 · 2024-09-07T06:37:06+00:00

There's a formal process called QDRO. It's yet another legal feee.

Plan administrators like Fidelity/Schwab/Rowe/etc will probably insist on a QDRO to split the account. This also shields the original account and what will likely be a new a new IRA for your ex from tax penalties.

It'll split the savings properly. If date of separation rules are in effect, you'll receive all the contributions made after DOS.

techrmd3 · 2024-09-07T05:33:30+00:00

division of assets (401k is an asset) is by the agreed split percentage

What most people do is a declaration of assets and inventory of assets and both parties exchange and combine the data and start splitting. This will be due or agreed to be sent right after initial hearings or grant of consideration of divorce before the court.

In my case there were enough assets both in tax deferred-retirement (401k, IRA, pension) and taxable accounts that I could split tax deferred and taxable assets in a 1 to 1 (if you get agreement on this)

By offering more taxable assets and some tax deferred IRA, this way I was able to keep my 401k intact

what "should happen" is that there is near parity between spouses in tax deferred accounts and therefore splitting out 401k money should be a "wash" percentage wise... of course some spouses have no 401k (sigh)

The date you filed or were filed on basically "freezes" the accounts in time, the percentages apply to the accounts AT THAT TIME (might want to change investment strategies right? I put mine in to Treasury Funds when we disclosed assets, a big negative move in the market and you have less assets than you disclosed... which will be very difficult to explain)

technically new deposits to 401k and matches should not be split but in most practical terms the splits are dollars and it all gets mixed. If you have concerns about 401k and amounts it would be a good time to try to get agreement with soon to be ex on these things. (as in will you take 10k in extra checking so I can keep my 401k? or if you need to add zeros to that conversation... whatever works)

also IF you can avoid moving a 401k over to the spouse you will not have to do a QDRO (Qualified Domestic Relation Order) - the court order and legal lingo to get the account moved under exes name. This is a BIG hassle and well worth a few K to the ex missus to avoid it ESPECIALLY in pension cases.

WizofWorr · 2024-09-07T04:30:48+00:00

Following.

I've had a similar question in mind regarding cashing out some 401k to pay my retainer.

My thinking is, why not if I'm just going to have to split it with her anyways?

Title	Should I stop depositing into my 401K?
Author	disgustinbrother
Upvotes	4
Comments	11
Date	September 7, 2024 2:33 AM UTC (1 year ago)
Subreddit	Posted in /r/Divorce_Men
Original Link	https://old.reddit.com/r/Divorce_Men/comments/1fawrk7/should_i_stop_depositing_into_my_401k/
Archive Link	https://theredarchive.com/r/Divorce_Men/should-i-stop-depositing-into-my-401k.1529671 https://theredarchive.com/post/1529671

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