Q: My husband wants my 401(k) now, but I don't want to get distributions until I have to. Will he win if he goes through the court system? What is his right to my 401(k), which I opened before I married him? Right now, my daughter is my beneficiary. We have no pre-nuptial or post-nuptial agreement. --MT
A: Stop worrying. Your husband has no case to take through the court system. As long as you're alive, he has no legal claim to your 401(k) account.
In fact, even if you want to take a 401(k) distribution yourself, you can't do it while you're working for the company that sponsors the plan, unless you qualify for a special hardship withdrawal.
But your husband is legally entitled to be your 401(k) beneficiary unless he has waived that entitlement in a post-nuptial agreement. (Nobody can waive it in a pre-nuptial agreement because it's a right that doesn't exist until after you're married.) In fact, if you didn't give your 401(k) plan administrator a written waiver signed by your husband, the plan shouldn't have let you list your daughter as your beneficiary.
So what are your options if you want to make sure your husband doesn't inherit your 401(k) plan?
You have three choices:
1. You can persuade him to sign a waiver.
2. As soon as you leave this job, you can transfer your 401(k) account into an Individual Retirement Account. (See my earlier posts on how to do a trustee-to-trustree transfer to avoid taxes.) IRAs aren't governed by the federal law that establishes the rules for 401(k)s. You can name your daughter or anyone else you choose as your IRA beneficiary.
3. You can divorce your husband. However, in a divorce he may get part of your 401(k) account even though you opened it before you married him. The reason: In most states, an account you have contributed to during your marriage is considered a marital asset. That makes it subject to division in a divorce. How big a share your husband might get depends on many variables, including how long you've been married and what other marital assets you own.
Please send your questions to [email protected]. I'm sorry I can't respond personally to every email. Questions are only addressed online.
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