Retirement Account Ownership

[icedcoffee]

Assume a married couple has combined finances.  Both couples contribute to 401k up to at least the employer match, but they are not maxing out the full $19,500. After they've hit the employer max does it matter which person contributes?

Like is there a reason why one person shouldn't contribute just the 6% while the other contributes 15%?

Wondering if there are any things I haven't considered.

[puppylove64]

I personally would not let my husband do all the contributions and I get just the minimum. What if we divorce? What if he cashed out his retirement and gambled it all away and I didn’t know until it was too late. I would do as equal retirement contributions as possible. I would not put myself in a possibly bad position.

With that said, I only contribution the matching portion to my 401k. Then I add more to an IRA. My 401k has high fees and I like the control I have over the IRA

[simpsongal]

We have DH fund the DCFSA b/c his income is lower than mine and fully subject to OASDI (social security). My income usually hits the OASDI max around November for the year (The maximum taxable income for OASDI in 2021 is $137,700). I'm not sure if the same consideration would apply to pre tax retirement and the impact on income/AGI relative to OASDI. Just throwing it out there as a possibility.

[icedcoffee]

May 3, 2021 8:31:57 GMT -5 puppylove64 said:

I personally would not let my husband do all the contributions and I get just the minimum. What if we divorce? What if he cashed out his retirement and gambled it all away and I didn’t know until it was too late. I would do as equal retirement contributions as possible. I would not put myself in a possibly bad position.

With that said, I only contribution the matching portion to my 401k. Then I add more to an IRA. My 401k has high fees and I like the control I have over the IRA

This is a good consideration.  Hypothetically though retirement accounts would be considered joint property and need to be split equally in a divorce, right?

[Susie]

May 3, 2021 8:40:05 GMT -5 simpsongal said:

We have DH fund the DCFSA b/c his income is lower than mine and fully subject to OASDI (social security). My income usually hits the OASDI max around November for the year (The maximum taxable income for OASDI in 2021 is $137,700). I'm not sure if the same consideration would apply to pre tax retirement and the impact on income/AGI relative to OASDI. Just throwing it out there as a possibility.

We pile as many deductions as possible onto H's payroll for the same reason -- he carries our medical flex spending, dependent care flex spending, and health/dental/vision insurance with employee contributions because he's fully subject to SS withholdings while part of my income goes above the threshold.  I would think 401k/457b would be the same logic.

[puppylove64]

May 3, 2021 8:45:12 GMT -5 icedcoffee said:

May 3, 2021 8:31:57 GMT -5 puppylove64 said:

I personally would not let my husband do all the contributions and I get just the minimum. What if we divorce? What if he cashed out his retirement and gambled it all away and I didn’t know until it was too late. I would do as equal retirement contributions as possible. I would not put myself in a possibly bad position.

With that said, I only contribution the matching portion to my 401k. Then I add more to an IRA. My 401k has high fees and I like the control I have over the IRA

This is a good consideration.  Hypothetically though retirement accounts would be considered joint property and need to be split equally in a divorce, right?

I have heard that, but I’ve also heard of negotiations like you get the house, you get to keep your retirement account. They keep retirement account and have to pay off credit debt. Blah blah, I’m no attorney, but I would just avoid making them too unequal because I don’t want to get shafted

[icedcoffee]

May 3, 2021 9:32:39 GMT -5 puppylove64 said:

May 3, 2021 8:45:12 GMT -5 icedcoffee said:

This is a good consideration.  Hypothetically though retirement accounts would be considered joint property and need to be split equally in a divorce, right?

I have heard that, but I’ve also heard of negotiations like you get the house, you get to keep your retirement account. They keep retirement account and have to pay off credit debt. Blah blah, I’m no attorney, but I would just avoid making them too unequal because I don’t want to get shafted

I hear you.  It's a good consideration.

[icedcoffee]

SSI is another good consideration. Thanks simpsongal and Susie . I hadn't really fully considered that!

Unfortunately I have the higher income AND the better benefits. 

[sometimesrunner]

May 3, 2021 8:54:07 GMT -5 Susie said:

May 3, 2021 8:40:05 GMT -5 simpsongal said:

We have DH fund the DCFSA b/c his income is lower than mine and fully subject to OASDI (social security). My income usually hits the OASDI max around November for the year (The maximum taxable income for OASDI in 2021 is $137,700). I'm not sure if the same consideration would apply to pre tax retirement and the impact on income/AGI relative to OASDI. Just throwing it out there as a possibility.

We pile as many deductions as possible onto H's payroll for the same reason -- he carries our medical flex spending, dependent care flex spending, and health/dental/vision insurance with employee contributions because he's fully subject to SS withholdings while part of my income goes above the threshold.  I would think 401k/457b would be the same logic.

401k does not come out pre-SS and medicare like the insurance/FSA/HSA does. 

[wildrice]

May 3, 2021 8:45:12 GMT -5 icedcoffee said:

May 3, 2021 8:31:57 GMT -5 puppylove64 said:

I personally would not let my husband do all the contributions and I get just the minimum. What if we divorce? What if he cashed out his retirement and gambled it all away and I didn’t know until it was too late. I would do as equal retirement contributions as possible. I would not put myself in a possibly bad position.

With that said, I only contribution the matching portion to my 401k. Then I add more to an IRA. My 401k has high fees and I like the control I have over the IRA

This is a good consideration.  Hypothetically though retirement accounts would be considered joint property and need to be split equally in a divorce, right?

In theory, yes, but it depends on how savvy your spouse is and what their lawyer asks for.

When I divorced my XH, we did not use lawyers and he did not ask for retirement. I'm not sure he knew that he could, and I was certainly not going to suggest it. So I kept 100% of my retirement and he only kept the (very small) amount that he had saved in his account. The most fair thing would be to divide assets equally, but if I'm going to come out ahead in a divorce, I'm certainly not going to push the issue (lol).

Currently we actually ARE saving more in my H's retirement than in mine, but that is partly laziness on my part because I haven't gotten around to upping my contribution since he got his job last year. The general plan is for us to both contribute the same amount going forward. Our incomes are fairly similar so I don't think there would be any tax advantages to doing it another way.

[plutosmoon]

I'm not a lawyer, jut a divorced lady on the internet, but when I divorced assets were split 50/50. It was really valuing some non money assets that was hardest, cash/stock asset split is the easiest part of divorce in most states. He had way less retirement because of his spotty work history, so I transferred an equalizing sum. My premarital amount was excluded and not split (save your statements!). Also, my retirement plan required spousal consent to do so much as a rollover, it was also required for withdrawals and loans, so a spendthrift spouse can't just do as they please. You can check with your individual plan to see if you have this added protection. In many cases it shouldn't matter who saves in which plan, it's all joint money whether you want it to be or not.

Now, as a divorced lady, my advice is still to split the contributions equally, emotionally, transferring that money to him was hard. Should I ever remarry, I plan on an equal split. Another thing to consider is if one spouse holds all the accounts and they die, how long does it take for the account to be released to the surviving spouse? Good to have money in each name individually. Probably not an issue in your case, but for anyone else reading that might not have their own account.

[ellipses84]

Peace of mind for the future possibility of divorce or death (which shouldn’t really make a difference but it seems more fair to keep it in equal accounts). If your finances are 100% combined it’s not an issue but if they are separate, then you’d have to determine what’s fair in terms of paying bills / saving for retirement especially if salaries are vastly different.

That being said, my DH was way behind in retirement when I met him, he didn’t have access to a 401k until recently and I’m the primary breadwinner. Our retirement is more weighted to my accounts and although we are trying to catch him up, he’ll probably never catch up to me.

[ssmjlm]

For us, retirement is separate and we both max. In the event of divorce, it would be the easiest thing for us to split because we’re even.

I’m also the breadwinner and have better benefits. DH’s company does everything by paper and still send paper paystubs. So I just deal with all the deductions and flexible spending crap.

[mlkgls]

May 3, 2021 8:45:12 GMT -5 icedcoffee said:

May 3, 2021 8:31:57 GMT -5 puppylove64 said:

I personally would not let my husband do all the contributions and I get just the minimum. What if we divorce? What if he cashed out his retirement and gambled it all away and I didn’t know until it was too late. I would do as equal retirement contributions as possible. I would not put myself in a possibly bad position.

With that said, I only contribution the matching portion to my 401k. Then I add more to an IRA. My 401k has high fees and I like the control I have over the IRA

This is a good consideration.  Hypothetically though retirement accounts would be considered joint property and need to be split equally in a divorce, right?

In a community property state I think this is true in theory, but I know that I offered substantially less than 50/50 given the circumstances and it was approved. I would personally advise against an uneven split, even if you’re 100% happily married. I’ve heard of too many instances where the wife ends up being shortchanged in a divorce. 

[goldengirlz]

I need someone to explain the deductions thing like I’m 5.

If you’re married filing jointly, then doesn’t everything get recalculated when you file your taxes anyway? Why does it matter who takes the deductions?

(I doubt it would change things for us since H and I earn more or less the same amount and we both earn above the SS threshold, but I’m curious anyway.)