What happens to my 401K or retirement account when I get divorced?
Retirement accounts are either marital property, separate property, or a mixture in Tennessee. Any portion earned before the marriage would be separate property. The portion earned during the marriage would be marital property. If it all was earned before the marriage, and no further contributions were added during the marriage, then it would be separate property along with the earnings from it. If it was all earned during the marriage, then all of it would be marital propety.
If the account started before the marriage, then the portion earned during the marriage would be distributed under Tennessee Law according to equitable distribution. This means the Court would start at 50 Percent to each spouse, but could increase or decrease the amount based on the factors for Equitable Distribution in Tennessee. The factors are found at Tennessee Code Annotated 36-4-121 which provides:
(1) The duration of the marriage;
(2) The age, physical and mental health, vocational skills, employability, earning capacity, estate, financial liabilities and financial needs of each of the parties;
(3) The tangible or intangible contribution by one (1) party to the education, training or increased earning power of the other party;
(4) The relative ability of each party for future acquisitions of capital assets and income;
(5) The contribution of each party to the acquisition, preservation, appreciation, depreciation or dissipation of the marital or separate property, including the contribution of a party to the marriage as homemaker, wage earner or parent, with the contribution of a party as homemaker or wage earner to be given the same weight if each party has fulfilled its role;
(6) The value of the separate property of each party;
(7) The estate of each party at the time of the marriage;
(8) The economic circumstances of each party at the time the division of property is to become effective;
(9) The tax consequences to each party, costs associated with the reasonably foreseeable sale of the asset, and other reasonably foreseeable expenses associated with the asset;
(10) The amount of social security benefits available to each spouse; and
(11) Such other factors as are necessary to consider the equities between the parties.
What if I took out a loan on my retirement account?
Well, any loan taken against a retirement account will be evaluated by the court to determine the purpose of the loan. For example, if the loan benefited the marriage, then both spouses will be responsible to repay it. However, should the loan be for one spouse’s benefit, then the court will assess that debt to that spouse.
Before you make any decision on your retirement accounts, contact an experienced Family Law attorney and discuss your particular facts.