The New York court will look at every single asset you and your spouse have when dividing your property in a divorce. This includes retirement accounts. If you have a 401K, the court can divide that account between you and your spouse. There are some things you will want to know and understand about dividing a 401K in a divorce situation.
Zacks explains that the division of assets in a divorce will include your 401K unless you have a prenuptial agreement or decide on a different option. The good news is that with a court order, you will not face tax penalties from removing money from the account. However, you still want to be cautious about the split.
You want to make sure the court order is very specific. Assigning percentages to what you each get often works better than assigning an exact dollar amount. This is because your account balance may change due to the investments. It helps ensure a fair split and avoids any issues where you end up with little money left due to a drop in your account value.
There is a way you might be able to protect your 401K. Instead of dividing this account, you could offer your spouse other assets. For example, if the account is worth $100,000 and you have a house worth $100,000, you may offer your spouse the house instead of splitting both assets. This could help you save your retirement money, which might be the best possible option if you are close to retirement age. This information is for education and is not legal advice.