It may be easy to go into your divorce proceedings in Texas believing that you know what to expect. Yet like most, the fact that your individual retirement assets (specifically your 401(k)) are subject to property division likely comes as a surprise.
A closer review of such an asset reveals why this is the case. Contributions made to your 401(k) during your marriage come from marital income. For this reason, the court considers them marital assets. Even still, you may have concerns over how dividing up your 401(k) might impact your retirement plans. This prompts the question of whether you can keep your full account in your divorce.
Giving up your interest in another marital asset
According to the 401(k) Help Center, you can, but it may come at a cost. That cost will likely be you agreeing to forego your interest in another marital asset of comparable value. That may help to convince your ex-spouse to relinquish their claim to any 401(k) assets due to them.
Weighing the advantages and disadvantages
You may view this as a small price to pay to keep your retirement plans intact. Yet one element you need to consider is how much this course of action may force you to give up. The court values retirement assets at their potential future value (after years of potential growth from investment returns and earned interest). If you are already nearing retirement age, that growth may not be overly significant. Yet if you are still several years (or even decades from retirement), that growth may be massive.
This may require you to give up your claim to a significant asset (such as your marital home) right now to preserve your retirement plans. While this information is not a substitute for legal advice, it warrants consideration before committing to any course of action.