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Strategic Divorce

Dividing Retirement Plan Assets In A Divorce

  • By: Michone Riewer
  • Published: October 18, 2019

Filing for divorce is a complicated process that involves many difficult decisions. While the priority should be determining the care and well-being of the children, dividing marital assets can be a significant challenge. There are issues such as keeping or selling the family home, dividing bank accounts and debts, and splitting up other assets.

Retirement savings is one of the most valuable assets for many, and it needs to be handled appropriately to avoid unnecessary taxes or penalties. These plans, which include 401(k), pension plans, IRAs and other accounts, are likely marital assets regardless of whose name is on them. While a spouse may not be entitled to half, they will get a certain percentage.


A Qualified Domestic Relations Order (QDRO) is a judgment, court order or decree that addresses child support, spousal maintenance and rights to marital assets. These can also outline how to divide a pension plan. It can strategically address or make provisions for payout without getting penalized for breaking the initial guidelines. The retirement plans’ administrator and the court must then approve this.


The best strategy for the optimal payout will depend on the plan, and it often gets complicated. Nevertheless, the format will likely be:

  • Lump-sum: This can be at the time of the divorce or some future milestone.
  • Periodic payments: These can be monthly or on a particular schedule. They may also begin at a point in the future when the plan was designed to start.


It is important to remember that these nest eggs were likely designed for a married couple, so dividing them up often means a more modest standard of living than initially planned. You may also need some of this money, at least initially, to pay living expenses – this can lead to financial difficulty in the future if you do not replenish those accounts.

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