Maryland’s divorce laws require you to divide marital property fairly with your soon-to-be ex-spouse. Assets such as a retirement plan and house need division even if only one spouse provided the funding.
If you regularly contributed a portion of your income to a 401(k), your spouse has a legal right to some of its proceeds. During your divorce, your spouse may liquidate his or her fair portion of the fund, as noted by Kiplinger Personal Finance magazine.
What if my spouse did not contribute funds to my retirement plan?
Because of Maryland’s equitable distribution laws, a judge may consider how much a nonworking spouse’s contribution enriched your retirement plan. For example, if your spouse stayed home and maintained your shared residence, his or her time may have a fair market value.
During the course of negotiating monetary fairness, your ex-spouse may request a lump sum payout from your 401(k). You may, however, request trading your other marital assets for your spouse’s fair share of a retirement plan.
How may I trade the house instead of my retirement fund?
Based on your circumstances, the equity value in your home may represent a significant portion of your marital property. This may enable you to buy out your spouse’s ownership of the house or trade your portion of its equity to save your 401(k).
As noted by Bankrate.com, you may also have an option to sell your home and then split the proceeds fairly. Depending on the negotiated terms of the divorce settlement, you may receive both your fair share of the financial value of the property and a reasonable portion of your retirement plan.