People with a 401 (k) may consider taking money from their accounts for many reasons. Struggling to make ends meets during the COVID-19 pandemic is one reason. Another reason is that they’ve separated from their spouse and need the funds to survive.
A 401 (k) is a defined contribution plan where employees contribute funds each year to a retirement plan. The employer may provide matching amounts. The advantage of a 401 (k) is that you don’t have to pay taxes on the income until you withdraw the money. Often, withdrawing money later in life means you’re in a lower tax bracket than when you contributed, so you save on federal taxes by postponing the withdrawal.
In Texas, all property acquired during the marriage is considered marital property unless there is a pre-nuptial agreement or a post-nuptial agreement. Marital property does not include property either spouse owned before the marriage. Marital property does not include property acquired during the marriage if the parcel was obtained – by a gift, through a will or estate when someone dies. Marital property doesn’t include a personal injury recovery unless the recovery is for loss or earnings (while the accident victim was married).