I will withdraw and rollover to an IRA; understand I can cash out needed living expenses? Overall my assets appear to be more than his; 401k lists 2 sons and current husband as beneficiaries. Help me protect all of my 401k/IRA.
Kay - I am very sorry that you are going through this.
Where you live, your total assets, and how your assets have grown during your marriage are all factors that are likely to affect your negotiating position. The fact that you have additional beneficiaries on your 401k is not not likely to make any difference. Retirement assets are not ring-fenced in a divorce proceeding like they are in a bankruptcy.
You should start by speaking to a divorce attorney and consider bringing in a financial advisor to provide advice and counsel about asset valuations. What I mean by that is, a nominal dollar in a 401k plan is worth less than a dollar in a bank account because of the deferred tax liability in a pre-tax account. At the same time, the issue is not as simple as multiplying the 401k balance by 1 minus the tax rate to obtain an after-tax value, because there is an embedded value in maintaining tax deferred status for as long as possible.
A financial advisor, working alongside your legal advocate, can help ensure that you are treated fairly during the settlement process, and may be able to improve the terms of your settlement through his or her understanding of asset valuation, investment taxes, liquidity, and the time value of money. Good luck to you and please feel free to post back with any additional questions.
