How Does a Texas Divorce Affect My 401(K) Account?

 Posted on March 25, 2024 in QDROs, Pensions and 401(k)s

For many people going through a divorce, your 401(K) account is one of the most valuable assets you have. It is natural to assume that each spouse will keep their respective 401(K) account, but Texas is a community property state, and you may need to divide your marital assets during your divorce, including money put into a 401(K) account.

A skilled Texas divorce attorney can help you navigate Texas property and asset division rules and fight for you to keep the assets you are entitled to.

How Will My 401(K) Be Divided in Divorce?

As you start the proceedings for your Texas divorce, it is important to keep in mind specific rules surrounding the division of property and marital assets. In Texas, Family Code states that any property or assets acquired by either spouse during a marriage counts as marital property; this is a “community property” rule. Marital property will need to be divided evenly under this rule, so if you earned or contributed significantly to a 401(K) account during your marriage, your spouse is likely entitled to half of your account.

It is important to keep in mind that any money put into your 401(K) before your marriage will not count toward the community property rule. It can be difficult to track the history of your 401(K) account, and you may need the assistance of an accountant to help figure out which part of your 401(K) counts as a marital asset and which is separate.

Is It Possible to Keep My 401(K) After Divorce?

It may be possible to keep the entirety of your 401(K) after your divorce has been finalized. In some cases, spouses may each have their own 401(K) accounts that were contributed to throughout the marriage. If these accounts are roughly the same, or if a settlement between spouses is reached to each keep their own 401(K) account, then your account will likely not be divided.

Alternatively, you may be able to keep your 401(K) asset if it matches the value of a different asset that your spouse is designated in the divorce. For example, if your marital home has the same value as your 401(K), one part may be awarded the home and the other the account.

Contact a Travis County, TX Divorce Lawyer

Navigating a high-asset divorce or one that involves your 401(K) account can be complex, as many factors go into determining community property and which spouse is awarded specific assets. Having an aggressive Austin, TX divorce attorney at your side and fighting for your rights during your divorce is essential.

Attorney Bill Powers is experienced with complex legal issues and high-asset divorce, and he can help you pursue the assets you are entitled to during divorce. Call Powers and Kerr, PLLC at 512-610-6199 for a consultation.