Were you to ask many of those that come to us here at The Rubinstein Law Firm for assistance with their divorce cases which aspect of those proceedings came as the greatest surprise to them, many might respond with them learning that their 401(k) account were subject to property division proceedings.
Contributions to a 401(k) during a marriage come from marital income (causing family courts to classify them as marital assets). You likely assumed the only impact your divorce in Michigan would have on your retirement would be changing the person who you might spend those years with. Knowing now that a major source of retirement income is also at stake, you wonder whether you can keep your full 401(k) in your divorce.
Relinquishing your stake in another marital asset
According to the 401(k) Help Center, this is possible, but only if you convince your ex-spouse to forego their interest in the funds. The only way to do this would likely be to give up your stake in another marital asset of comparable value. This may seem like a small sacrifice to keep your retirement plans intact, but such action should only proceed after weighing the pros and cons.
Reviewing the advantages and disadvantages
When valuing retirement assets in a divorce case, the court values them at their potential future value. If you are only a short time from retirement, that future value may not be much greater than it is now. Yet if you are still years away, then those funds might grow significantly. This could mean that you must give up much more now than you anticipated to enjoy the full value of your 401(k) in the future.