Whether you’ve just started your professional career or your a seasoned corporate veteran, making contributions to your retirement accounts is something important for many people. However, when you find that your marriage is no longer working, one thing you may not have considered is whether or not your retirement fund could be at risk. As such, understanding what will happen to your 401(k) in Louisiana is critical. The following blog explores what you should know about these matters and why it’s in your best interest to connect with an experienced Monroe, Louisiana property division lawyer to discuss these matters in further detail.
How Does Louisiana Handle a 401(k) in a Divorce?
It’s important to first understand that Louisiana is a Community Property State. As such, you’ll find that all assets obtained during your marriage are considered joint property and are thus subject to equal distribution, regardless of the contributions to the marriage by both parties. As such, your 401(k) is subject to division during your divorce.
If you started making contributions to you 401(k) before your marriage, the amount held in the account before you were legally married will be considered separate property. As such, only the funds accrued before maraige will be subject to division during the divorce. For example, if you had $10,000 in there before marriage and the balance sits at $60,000, your spouse is only entitled to half of the $50,000 accrued during your marriage.
Is There Anything I Can Do to Protect My Funds?
Unfortunately, due to Louisiana’s community property laws, there may not be much you can do during your divorce to protect your funds. If you are not already married, you can create a prenuptial agreement that details how you would like this handled during your divorce, which can offer greater protection. Additionally, a post-nuptial agreement can be created after you are legally married.
However, if you find that you are in the midst of a divorce and cannot create an agreement regarding your 401(k) it’s important to understand what your legal options during these matters are. Generally, you may find that one option is to pay out the amount your spouse is owed when you retire. However, if they do not want to wait for you to retire, you may find that you can utilize a Qualified Domestic Relations Order (QDRO) which allows you to transfer funds from your retirement account to your spouses without incurring the taxes associated with making a withdraw from your account. You’ll also find that you may be able to compromise and offer your spouse assets of equal value so you can retian the entirety of your retirement fund.
As you can see, there are many considerations you must make when getting a divorce while contributing to a 401(k). At Breithaupt, DuBos, & Wolleson, our dedicated legal team will do everything possible to assist you through these challenging times. Connect with us today to learn how we can represent you in these matters so you can fight for the best possible outcome if you are going through a divorce.
