How to Split 401k Funds in a Divorce

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A 401k is an employer-sponsored retirement plan that a portion of your salary funds pre-tax. Any money earned or invested into a 401k during a marriage is considered marital property, also called community property, in some states. At divorce, all 401k funds acquired during the marriage are divided among the spouses according to local marital property laws, which vary state to state.

  • Review the finances of each party. When deciding how to divide 401k funds, family law judges usually consider a number of factors before making a determination. Individuals should also consider these factors if they have decided to settle marital property themselves outside of court. Common determination factors include the length of the marriage, each spouses' individual wealth and financial situation, each spouses' future financial situation, the age and health of both parties, the contributions made during the marriage (including homemaker and child rearing services), how the rest of the marital property has been divided between the parties and any other relevant factor. In most instances, the court splits the benefits into a straight 50/50, particularly in community property states, such as California.

  • Make a determination how to divide the 401k benefits.

  • Ask the family court judge presiding over your divorce case to enter a qualified domestic relations order once you have decided how to split the 401k. QDROs are legal documents that advise 401k plan administrators how to divide the 401k benefits in accordance with the divorce decree at payout.

  • Provide the administrator of the 401k with a certified copy of the QDRO.

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