Law Office of Lily L. Huang
More Than A Decade Of Family Law Experience

How can you avoid dividing 401(k) plans during divorce?

Your retirement accounts are not all yours when it comes to California divorce law. If you or your spouse have a significant 401(k) or IRA investment, it would probably be divided. This is one of the most frequent sources of contention between divorcing spouses, but it does not have to be that way for you. 

Below you may find two common paths for dividing retirement assets or pensions. However, these simple solutions may not be the best way forward for you and your spouse. More specific strategies could be an option, but they would require a high level of cooperation and attention to detail.

The first path you might take, at least if you were the recipient of the funds from the 401(k), is to roll the money over into your own retirement account. As mentioned on CNBC, this might be a viable standard option if you were financially stable.

A common alternative to rollover would involve liquidating the retirement assets, something you would probably consider if you needed cash immediately. In terms of 401(k) plans, you could potentially avoid the penalty for early withdrawal in the context of divorce. However, this may not be the best alternative.

There are many ways that you may have an equitable divorce while minimizing your costs in terms of fees, time and paperwork. This principle would hold true even in the most hotly contested elements of your agreement. As mentioned above, many of these alternative strategies would require cooperation between you and your spouse. Additionally, the approach would depend wholly on your situation. Please do not think of this as specific legal advice. This is only background information.

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