If you’re getting divorced in New Jersey, understanding how to split assets is essential. If you’ve been married for some time, you may have a home, automobile, furniture, 401(k) and an IRA. If neither of you wants to keep the house, the solution is to sell the property and divide the proceeds. The same action can be completed with your automobile and furniture. In some situations, one of you will likely keep the asset and receive compensation. However, handling a 401(k) can be trickier, involving a few steps.
Living in a joint property state
Knowing how to split a 401(k) when you’re getting divorced is essential if you have been married and fortunate enough to save for retirement. Like many states, the equitable distribution system is used in your state for property division when you’re getting divorced. All assets counting as marital property must be divided fairly between both of you. The assets you both acquired during your marriage can be considered marital property. However, a 401(k) could be an exception.
Examining the situation is critical
Splitting a 401(k) in a divorce can get complicated if one of you brought the 401(k) into the marriage. For example, if you’re the breadwinner and already had a 401(k) account worth $200,000 when you got married, you may think you’ll be entitled to more when you get a divorce and it’s worth $300,000. In this situation, you are entitled to an equitable share, even though you may have earned a significant paycheck, contributing to the retirement account. If your spouse was the primary parent and took care of the house, the law recognizes their contribution as equal to yours.
Creating a fair solution
Equitable distribution allows you both to get creative. If you can negotiate in good faith and recognize each other’s contributions, you should be able to reach a fair settlement, leaving you both in a solid financial position.