When you navigate an Illinois divorce later in life, you may have different goals than you would if you split at a younger age. You may not have to work through child custody or child support issues. However, you may need to take extra time to consider your retirement plan and how you might preserve as much of what you saved for retirement as possible.
When it comes to your 401(k), how much of it you may have to split is going to depend on how much you put into it before and during your marriage. However, you may be able to keep more of your 401(k) by taking the following steps.
Consider replacing retirement funds with other assets
Depending on circumstances, you may be able to avoid giving away some of your 401(k) savings by instead making up for the value of it with other assets. For example, you might allow your ex to keep the marital home or a car in exchange for not touching your 401(k).
Consider the tax implications
It is wise to consider the tax implications associated with taking distributions from retirement accounts so that you might take steps to minimize them. You may need to use a Qualified Domestic Relations Order, and you may need to pay taxes when using one, depending on your age. However, you may be able to dictate that your spouse must cover these taxes in your divorce agreement.
Remember, the money you entered into the 401(k) before your marriage is yours and yours alone, meaning you do not have to split it with your former partner. However, money added to the account during the marriage may be subject to property division.