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Dividing 401(k) plans during divorce

On Behalf of | Dec 18, 2022 | Divorce

For many individuals in Texas, their 401(k) plans at work are one of their most significant financial assets. If they decide to get divorced, they and their spouses may have to divide these assets. Here is a look at how 401(k) plans are handled in a divorce proceeding. 

Asset distribution in a community property state 

When two people get divorced in Texas, their assets — such as their bank account funds, marital home and retirement money – are typically divided 50/50. This is because Texas is a community property state. As a result, one divorcing spouse’s 401(k) may have to be split down the middle, with each spouse getting an equal portion of it. 

However, any money that was contributed to the 401(k) plan before the marriage is not deemed marital property. This money will therefore remain off-limits during the asset distribution process, though contributions after the date of the marriage will be included. How a 401(k) plan is divided must be spelled out in detail in a decree known as a qualified domestic relations order, or QDRO. 

Legal support can be critical to this process  

Navigating property division can understandably be confusing and overwhelming. Fortunately, an experienced Texas family law attorney can help a divorcing individual to pursue his or her fair share of assets at the negotiation table. If certain asset division matters cannot be settled out of court, however, one’s attorney will be prepared to litigate these matters. Either way, a savvy attorney will seek the most personally favorable outcome for his or her client, keeping the client’s best interests and rights at the forefront of the divorce proceeding.