A divorce can come with significant emotional and financial turmoil. In Virginia, your spouse could be entitled to a portion of your 401(k) in the final divorce settlement. How funds in such an account are allocated depends on a variety of factors unique to a given case.
A prenuptial agreement may determine how assets are divided
If you have a valid prenuptial agreement, it will determine how a 401(k) or other assets are split. In some cases, the agreement may stipulate that retirement accounts aren’t divided at all. It is also possible that your estranged spouse will let you keep a larger share of a retirement account in exchange for receiving the family home or other items.
Money added to any retirement account could be joint property
Absent a prenuptial agreement, any money added to a retirement account could be considered a joint asset. This is true whether you or your employer contributed to the account during a marriage. It is also important to note that any contributions made to your spouse’s IRA or 401(k) are also considered to be joint property.
The spouse who made more money may receive a smaller share
It isn’t uncommon for the spouse who made the most money during a marriage will receive a smaller share of a 401(k). Alternatively, a judge could award the majority of a retirement account to the person who made the majority of the contributions over the past several years or decades. Regardless of how the account is split, money should not be removed from it before a qualified domestic relations order has been approved by a judge.
If you believe that you’re going to be getting a divorce in the near future, it may be a good idea to speak with an attorney. Legal counsel may be able to help you learn more about how retirement accounts or other assets may be split in a final settlement.