What Happens to My 401K During a Divorce?

Money is always a major consideration during the divorce process, and that includes a 401(k) retirement account. Aside from your home, a 401(k) could be your most significant financial asset, thus making it a contentious part of the divorce process. However, unlike your home, what happens to your 401(k) is not quite as simple.

In California, anything earned or obtained during a marriage is considered jointly-owned property. Unless otherwise agreed upon, a 401(k) account earned during the marriage is split equally between spouses. While you can sell your home or refinance it to buy out your spouse’s equity, you must involve your plan’s administrator when dealing with a 401(k).

Qualified Domestic Relations Orders

Once your divorce orders the division of the 401(k), you or your attorney must draw up a qualified domestic relations order, commonly known as a QDRO. This tells the administrator of your 401k how to divide it to comply with the Employee Retirement Income Security Act, or ERISA. The family court judge must approve and sign the QDRO, as well as the plan administrator.


Your spouse has three options for collecting their portion of your 401k: (1) roll the proceeds over into their own retirement plan, (2) leave their share intact with yours in the existing plan, taking their payments when you retire or (3) elect to take the money as a cash payment.


According to the IRS, your spouse’s chance to take their portion of your 401(k) in cash is a one-time deal at the time your plan administrator approves the QDRO. Beyond that point, unless they are over the age of 59½, they are subject to a 10% penalty for an early withdrawal.

If you’re going through a divorce and need to protect your 401(k), please contact me at the Law Offices of Jeffrey S. Graff today. As a Westlake Village divorce lawyer with over 30 years of experience, I can provide you with the personalized legal solutions you need.

Call me at (805) 633-4999 for a free initial consultation!

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