Will You Have to Split Your 401(K) or Pension During a Divorce?

If you are going through a divorce, you probably already know you must divide the marital estate. This likely includes your home, cars, savings, and other assets. You may not realize, though, your 401(k) and pension may also be on the table during your settlement negotiations.

In Texas, everything you and your soon-to-be ex-spouse accumulate during your marriage is community property you must split. Unless you have a prenuptial agreement that addresses your 401(k) or pension, you should plan to split them.

When did you make contributions?

If you only made contributions to your 401(k) or pension before you walked down the aisle, your retirement savings may be a separate property you can keep. The contributions you made during your marriage, though, are likely divisible community property. This does not necessarily mean you must split the accounts evenly, however.

Can your spouse withdraw retirement funds?

You may have a valid claim to some of your spouse’s 401(k) or pension. If you worry your spouse may withdraw retirement funds before your divorce becomes final, you can seek a standing order. This type of order specifically prevents divorcing spouses from tampering with retirement accounts.

How do spouses receive benefits?

If you have a 401(k) or pension to divide during your divorce, you probably need to request a qualified domestic relations order. The QDRO, which becomes part of your divorce decree, directs the fund’s manager to pay benefits according to the judge’s determination or your settlement.

Ultimately, whether you want to protect your retirement accounts or to obtain a share of your spouse’s retirement savings during divorce, it is critical to secure the proper paperwork.

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