What happens to retirement accounts in a divorce?

Retirement accounts are generally considered marital property to the extent they were funded during the marriage, meaning they are typically subject to division in a divorce. This applies to 401(k) plans, IRAs, pensions, and other retirement savings.

The portion of a retirement account that was accumulated during the marriage is usually what is subject to division. Contributions made before the marriage or after separation may be considered separate property in many jurisdictions, though this varies by state.

Dividing a 401(k) or pension plan from a private employer typically requires a Qualified Domestic Relations Order (QDRO), which is a legal document that instructs the plan administrator to divide the account according to the divorce settlement. Without a properly drafted QDRO, the plan administrator will generally not release funds to the non-employee spouse.

IRAs do not require a QDRO but instead are divided through what is called a transfer incident to divorce, which must reference the divorce decree. Military pensions, government pensions, and other specialized retirement plans may have their own division rules.

It is important to note that early withdrawal penalties and tax consequences can apply if retirement funds are not transferred correctly. A QDRO-compliant transfer or an IRA transfer incident to divorce generally avoids these penalties.

DIVORSAY's ClearSplit calculator includes retirement account division in its analysis, and our Case Framing tool can help you build arguments about how retirement assets should be allocated.