Your divorce will almost certainly bring with it its own set of challenges. If, for example, you were not the primary income earner in your marital home in Everett, then a certain degree of financial uncertainty may await you. Child and spousal support (if the latter is an option) may help, but often you may need an immediate infusion of funds to secure housing or pay to go back to school or to receive vocational training.
Many have come to us here at Nunn Vhan & Lang, P.L.L.C. asking for advice in this regard. One area that they (and likely you) overlook is the potential assistance that may come from their ex-spouse’s 401k.
Dividing up a 401k in a divorce
Because contributions made to your ex-spouse’s 401k during your marriage come from marital assets, family courts consider them to be marital property. Thus, you may receive as much as half of those contributions. Typically one would roll what is due to them over into their own retirement account, yet if you need money right now, could cashing those funds out be an option?
An early withdrawal from a 401k account usually results in a tax penalty. However, according to information shared by the website SmartAsset.com, you can make such a withdrawal during your divorce proceedings without incurring a penalty.
Considering the consequences of a 401k withdrawal
Yet before you start planning on how you might spend that money, you should consider the long-term implications of doing so. Leaving the money in your own retirement account allows it to potentially grow over the years. If you are still several years away from retirement, that growth could be substantial. Cashing out means giving up on it.
You can learn more about the decisions that come with property division by continuing to explore our site.