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National 401(k) Day: Special reminder in divorce asset division

Accurate property division is obviously important in a high-asset divorce, and the details need to be fully understood and properly attended to in a settlement agreement.

A good reminder of this is National 401(k) Day, which takes place tomorrow, September 9. It is probably a safe bet that most people are unaware that the 401(k) saving device has its own day and that not many calendars have been marked.

Knowledge is power, though, and noting the day might make a few people realize that they need to pay a little attention to any savings they have set up for retirement.

This certainly holds true for divorcing couples, especially high-net-worth couples, where one or both spouses can easily command significant assets in a multitude of retirement vehicles, such as pension plans, deferred stock options and, of course, a 401(k) plan.

Noting how those assets are to be divided is often of utmost importance in a high-asset divorce, as is the wording that is used to accurately set forth the parties' intentions.

An example that has been used is equal division between two parties of a 401(k) account. Say it holds $1 million (not that uncommon for an employee who has contributed at a high rate for many years). If the language specifies that each party will get half, then, indeed, each party will get half. If, however, the agreement specifies that the non-employee former spouse will get $500,000 from the account and the account drops precipitously before an employer has legal authorization to make payment from it (called a Qualified Domestic Relations Order), the ex-spouse will in effect be receiving more than 50 percent. If the account rises appreciably, he or she will be receiving less than 50 percent.

Asset division -- especially the precisely intended and accurate division of retirement accounts -- can be complex, and fully considering the matter and setting forth the details can be tricky. Consulting a family law attorney with experience in high-asset divorce matters is a logical first step.

Related Resource: Huffington Post, "Celebrate National 401(k) Day by Protecting Yourself from Divorce Mistakes" Sept. 5, 2011

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