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Value of forfeited unvested balance?


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I had a forfeited unvested balance showing on my 401k statements, which resulted in my ex and I calculating different figures for our QDRO. The unvested balance was forfeited by a 5 year service break before filing the divorce petition.  The company kept the forfeited balance in my account for a few months before transferring it back to their account.

My position is that the forfeited unvested balance had no value to the marital estate prior to filing for divorce and should not be included in QDRO calculations. What is your opinion?

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16 hours ago, Ji1mmyD said:

I had a forfeited unvested balance showing on my 401k statements, which resulted in my ex and I calculating different figures for our QDRO. The unvested balance was forfeited by a 5 year service break before filing the divorce petition.  The company kept the forfeited balance in my account for a few months before transferring it back to their account.

My position is that the forfeited unvested balance had no value to the marital estate prior to filing for divorce and should not be included in QDRO calculations. What is your opinion?

You are right that it should not be counted in your current value of your retirement account. However, that doesn't mean that the judge won't give the spouse more than you think he/she should get. But it shouldn't be in the starting numbers which are then subject to division.

Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC
President
Qualified Plan Consultants, Inc.
46 Daggett Drive
West Springfield, MA 01089
413-736-2066
larrystarr@qpc-inc.com

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If it was forfeited it doesn't exist and I don't know of any state where property that no longer exists can be classified as marital property.  It is no different from the loss of equity in real property caused by a drop in market value - it's just gone. 

Unless the forfeiture was due to your affirmative and purposeful dissipation of the funds in the account (for the purposes of depriving your wife of her share of your marital assets), in which event the court could treat it as extant, then there is no rational argument she can make against assets that no longer exist. 

   

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Thank you all for your feedback! I had switched jobs and continued gainful employment. All statements were provided with the unvested balance clearly identified with its gains/losses separately detailed and also forfeited according to the plan summary. I have seen no benefit from the unvested balance pre/post forfeiture and have been completely transparent. If there are certain circumstances other than a judge’s discretion or improper disclosure that would invalidate my position I’d be curious to hear about them. Of course every situation is unique but this is about as simple as it gets. I’m the AP, if it makes a difference. Thanks again!

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