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TJ, Esq.
TJ, Esq., Attorney
Category: Family Law
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Experience:  JD, MBA
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my friend worked from 2002 until 2006 and put 25% of his paycheck

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my friend worked from 2002 until 2006 and put 25% of his paycheck into his 401k account. he married in 2008, now is divorcing in 2011, but hes been in his divorce for 2yrs now. when he married in 2008 he had 80k in the 401k account. when he married in 2008 he dropped his contributions down to 7%. now in 2011 when he filed his divorce he had 120,000. now its 2013 and he has 100,000. how does the court decide who gets what from his 401k? also his attorney said she cant touch his 401k, but didnt elaborate on why she cant touch it. just told him its his retirement account.

im confused as ever and trying to understand his attorneys reasoning... any help is greatly appriciated...
Hello and thank you for allowing me the opportunity to assist you.

It doesn't make sense that the wife wouldn't be entitled to part of the 401k. After all, it was partially funded with community property (i.e., income that he earned during the marriage was marital property, and thus, his 7% contributions were marital property).

Generally speaking, the judge would distinguish between the separate part of the 401k and the community part. So, the judge would likely rule that the $80k plus any returns on the $80k are separate. The 7% contributions would be community, as well as any returns on those funds. Ideally, your friend would have evidence presented by an expert witness with regard to the paper trail and how the funds should be determined as either separate or marital. The wife would likely be entitled to 50% of the community portion.

I don't know why the attorney would say that the wife is entitled to nothing, which doesn't make sense. I suspect that there may have been a miscommunication.

Does that answer your question? Please let me know if you need clarification, as I am happy to continue helping you until you are satisfied. Also, your positive feedback is much appreciated.

Thank you for using our service!
Customer: replied 4 years ago.


how does the judge know what the returns for the 80k are?

Hi again.

Q: how does the judge know what the returns for the 80k are?

A: That's why I wrote: " Ideally, your friend would have evidence presented by an expert witness with regard to the paper trail and how the funds should be determined as either separate or marital." It'll be your friend's job to figure that out for the judge. The easiest way is to retain an expert who can figure it out for your friend and then produce a report and testify.
Customer: replied 4 years ago.


he said he was told there was a federal law that protects 401k's from judgements?


 


who would this (expert) be?

Hi again.

Q: he said he was told there was a federal law that protects 401k's from judgements?
A: The federal law protects the 401k in bankruptcy. Texas law protects the 401k from judgment creditors. But both laws are irrelevant to this situation. Those laws can't protect his 401k from being distributed to his wife in a divorce.

Q: who would this (expert) be?
A: Likely a stock broker, financial planner, banker, or somebody else with a similar job who has the expertise and experience to analyze financial records and investments and piece it together for your friend and the judge. His attorney should be able to find somebody.
Customer: replied 4 years ago.


he says he can write to the 401k and get statements and account balances for the dates involved, would a cpa be the same as a stock broker?

Hi again.

Q: would a cpa be the same as a stock broker?
A: A stock broker could be a CPA. Are they the same thing? No. A stock broker is somebody who advises as to investments. A CPA is an accountant (i.e., a number cruncher). It's possible that a CPA could analyze the situation and be an expert witness, however. It depends on the particular CPA's expertise.
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Customer: replied 3 years ago.


what are the dates the court looks at in determining the division of a 401k?

Hello again. Glad to see that you're still using our service.

Generally, the important dates are the date of the marriage (it begins the period where contributions marital property) and the date of separation (it begins the period where contributions are separate property).