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401(k) division in North Carolina divorce cases

Many North Carolina couples manage after a decade or so of marriage to amass significant marital assets, including those that are financial in nature, like 401(k) retirement accounts. In the event that one of these couples were to dissolve their marriage, some of the assets mat present complexities that are difficult to resolve during the asset-division process.

The funds accrued in 401(k) accounts during the course of a marriage are classified as marital property. Therefore, they are subject to equitable division like all assets falling under that classification.

Dividing the retirement account requires the divorce court to issue a Qualified Domestic Relations Order detailing the portion of the account now owned by the holder's ex-spouse. This new beneficiary of the account may cash out that assigned portion in a lump sum but will face taxes for doing so. These taxes are significant enough to deter many new beneficiaries from withdrawing their funds, which can be a good decision considering that the funds will continue to grow in proportion to the rest of the account and remain protected under the account's popular tax-sheltering quality.

In many divorce cases, both spouses struggle to accept seeing assets they built over time with individual hard work distributed in the court's impartial and decisive fashion. That is a fundamental reason that many spouses individually retain a divorce lawyer with a history of helping facilitate settlement agreements through alternative dispute resolutions or other pretrial measures that limit the court's influence on the issues stemming from divorce, many of which are inherently personal. That way, negotiating spouses can decide the terms of the settlement according to their particular values and priorities.

Source: 401k.org, "401(k) and Divorce", December 24, 2014

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