What Happens to a Retirement Plan and 401K in Divorce?

One of the most concerning issues for many people is the effect on their retirement plan or 401K in divorce. It is often the case that one spouse has accumulated substantial funds in a retirement plan during the course of the marriage. One spouse may have taken the lead on raising the couple’s children and/or maintaining the family home, freeing up the other become the “bread-winner.” This is why any funds deposited into the plan during the course of the marriage are considered marital property. Any funds deposited prior to the marriage or after the date of separation will not be considered marital property and are the sole property of the party who earned them.

Common Questions about Retirement or 401K in Divorce

Our experienced attorneys can answer questions like:

  • Can I cash out my 401K in divorce?
  • How to protect my 401K throughout a divorce?
  • Can I hide my 401K in divorce?
  • How to access my 401K before or during a divorce?
  • Is there a hardship withdrawal on a 401K in divorce?
  • Is there a 401K divorce calculator in Pennsylvania?

Types of Retirement Plans

It is important to differentiate between the various types of retirement plans. This can determine how and when the plan funds are accessible by the parties. A 401(k) or IRA plan can generally be divided at the time of divorce. A pension plan will often not be accessible by either spouse until the earning spouse retires. Even if the retirement funds are not readily accessible at the time of a divorce, this does NOT mean that you should wait to decide how funds will be distributed. This should be handled as part of what is called equitable distribution . Equitable distribution is the terminology used by Pennsylvania courts to reference how marital assets are divided. Spouses can settle equitable distribution matters through an agreement between them or it can be decided by a Judge. If you do not resolve marital property claims during equitable distribution, you may be waiving them permanently.

DRO’s and QDRO’s

Even when an agreement is reached between the parties on how the retirement funds will be distributed, or decided by a court, spouses will generally need a DRO (Domestic Relations Order) or QDRO (Qualified Domestic Relations Order) to execute that portion of an agreement or court order. The QDRO can be a complicated document and generally requires some very specific language. Your best bet is to engage the services of a competent and experienced attorney to draft this kind of order for you.

Call to speak with one of our experienced attorneys today.  The consultation is always free.  Take the first step to solidifying your financial future.

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