my wife, who I am in the process of separating from, is withdrawing huge chunks from her 401K to pay for personal expenses; a vacation and cosmetic surgery to name a few. I am afraid that she will drain the retirement account . The account is through her work and she said that I am not entitled to it any anyway.
Estate Planning Attorney
To answer your question of whether you are entitled to her 401(k). She is WRONG in assuming that because the 401(k) is 'through her work' that you are not entitled. The court divides assets based on a number of factors, including length of marriage, the contributions of each party, and the finances of the parties. If she earned the 401(k) during her marriage to you, some portion of her 401(k) is likely 'on the table' when it comes down to dividing assets. This means some portion would be added to the assets that you and her will divide. There are no guarantees, however, because the Probate (divorce) Court has a lot of discretion in dividing assets.
In terms of stopping the withdrawals, the answer to your question depends on whether you are going to file for divorce or not. If the Court is not involved, then your Wife is free to do what she pleases with her 401(k) if she is willing to pay the taxes and applicable penalties. When you do finally file for divorce, there is an automatic restraining order that enters on the selling or transfer of assets 'outside the normal course of business.' Cosmetic surgery and vacations may fall in the category of being outside the normal course of things. If your Wife continued this behavior after you filed for divorce, then the Court could take this into account and may sanction (punish) her or award you more of what is left of the 401(k) or give you more of some other asset to compensate. The Court may also order her to repay a portion of what she liquidated to you.
It is possible that the Court may also consider amounts she liquidated before you filed for divorce if she was purposely spending the assets in an attempt to keep them out of your reach. This is called "dissipation." However, if all of the account is gone before you file for divorce, and your Wife has no other significant assets, expect it to be difficult to recover the money.
One last concern you should look into is the fact that she is making these withdrawals and how if might affect your taxes if you still file jointly. I am not a tax professional, but you might want to consult an accountant to see if you are personally better off filing married separate because her taxable income will likely be higher than normal due to the withdrawals. Her penalties may also affect any refund.
You should consult an attorney if you wish to proceed with divorce. Once you file for divorce the Court may be able to address our Wife's behavior. Again, however, there are no guarantees. Best of luck.
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