What happens to your retirement fund during divorce?

Carefully planning and saving for your retirement takes a lot of work. If you and your spouse put money away in savings accounts, 401k accounts and/or IRAs, you probably have a substantial amount saved for the next chapter of your life.

However, if you and your spouse decide to split up before or during your retirement, what happens to the money you put away?

How are retirement assets divided?

Retirement plans can add some complications to the divorce process. Chances are, your retirement savings make up a decent-sized portion of your finances.

Most states consider retirement assets marital property. This means that the assets acquired are usually equally divided between both spouses. However, different types of retirement plans can have different policies and rules.

401k funds and IRAs

IRAs and 401k accounts are some of the more common forms of a retirement plan. These two types of plans can be divided differently.

When you get a divorce, you need to have a qualified domestic relations order to legally qualify to get a piece of your soon-to-be-ex spouse’s workplace retirement plan. This can include 401k funds and pension plans.

A QDRO is based off the divorce agreement, but it is a separate document. This document will outline how much and how the 401k funds will be transferred to you.

Individual Retirement Accounts, or IRAs, both traditional and Roth, do not require a QDRO. You will have to work out how these funds are divided among yourselves and your attorney or the courts will decide for you. This should be outlined in your divorce settlement. You will also need to have a rollover IRA account ready to transfer the funds.

These are two of the most common types of retirement assets, but you may have other types of assets and funds to divide, too. You may need to check with your attorney to see what you are working with and what you are entitled to.

Dividing assets during a divorce is complex, and retirement assets are no different. In fact, they can be even more complicated in some cases. Working with qualified attorneys and other financial professionals can help you figure out this process so you can make sure you are getting what you deserve.