Marital assets such as a 401(k) will likely be divided in a Mississippi divorce proceeding. However, it is important that the account be divided in an equitable manner and in a way that keeps your tax bill to a minimum. Take a look at what you can do to preserve as much of your retirement savings as possible after your marriage comes to an end.

1. What type of account do you have?

Traditional 401(k) plans are funded with pre-tax dollars, which allows you to reduce your tax burden in the year that you make a contribution. However, a Roth 401(k) is funded with money that has already been taxed. Therefore, the contributions will grow tax-free for as long as the plan is active. As a general rule, the long-term value of a Roth account is greater than the long-term value of a traditional plan even if they are worth the same amount today.

2. Make sure to allocate an existing account properly

You will likely need to have your attorney draft a qualified domestic relations order, or QDRO, prior to transferring a portion of a 401(k) to your spouse. Typically, that money will be deposited into a retirement account in his or her own name that he or she can manage or make future contributions to. It may also be possible to withdraw cash directly from your 401(k) and give it to your former partner.

3. Consider giving up other assets in lieu of your retirement savings

Your spouse may be willing to accept other assets in exchange for a share of a marital retirement account. In such a scenario, you wouldn’t have to worry about the tax implications of splitting a 401(k) because the account would remain intact.

If you have any question as to how assets are split in a divorce, a family law attorney may answer them. An attorney may also be able to help you obtain favorable settlement terms including the right to retain full control of an existing retirement account.