Certain possessions have emotional value because of the memories attached to them. Other assets might have perceived emotional value because of something they represent for their owner.

A retirement account is in some ways an intangible asset, as it is not something you can hold in your hands. However, it likely represents something very important to you, as your retirement savings will provide you with security and stability when you are older and are no longer able to command a living wage.

It is common for people to have an emotional reaction to the idea of splitting their hard-earned retirement savings with their spouse in a high-asset divorce. Will you have to split your retirement funds with your ex?

Unless you took steps to protect your retirement, division is likely

The judge presiding over your divorce will likely consider many different factors in their attempt to set fair and reasonable terms for the division of your property under Texas community property laws. Items you acquired during marriage and income earned during marriage will typically be subject to division.

Even if your spouse doesn’t have their name on the retirement account or the account predates your marriage, some of the money accrued in the account will likely be subject to division. Deposits made during the marriage, including employer matching amounts, will likely get split up.

However, the amounts you earned prior to marriage and what you continue to earn after your separation or divorce will remain separate property in most cases.

Division through divorce proceedings allows you to avoid penalties

In addition to worrying about splitting the account with your spouse, you probably also worry about the costs associated with an early withdrawal. The good news for those facing the division of a retirement investment account is that divisions done in accordance with a court order related to a divorce will not incur penalties or taxes the way that an early withdrawal for personal use would.

If retaining the full balance of your retirement account is a priority for you, you may be able to ask that the courts allocate other assets to your spouse to offset their portion of its value in the eyes of the court. You could also potentially negotiate terms for an uncontested divorce with your ex, which could include earmarking your retirement account as separate property as the divorce proceeds.