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What Happens When A Divorce Involves A Retirement Plan?

On behalf of Tasha K. Schaffner of Schaffner Family Law posted in divorce on Wednesday, June 21, 2017.

After spending years together, a Kentucky couple more than likely dreamed of what they would do during their retirement years. They may each have diligently contributed to their employers’ 401Ks or pension plans in the hopes of making those dreams a reality someday. When it became clear that divorce was on the horizon, each of them may have begun to wonder what would happen to those plans.

The wealth accumulated in a retirement plan during the marriage is more than likely going to be subject to division during the divorce in the absence of a prenuptial agreement stating otherwise. Of course, the parties could just agree to keep their own plans. However, the next question revolves around what happens if one spouse’s plan has a significantly higher amount in it than the other.

The spouse with less may still be entitled to a portion of the other spouse’s plan. To protect that amount, that individual will need a Qualified Domestic Relations Order from the court. A QDRO, as it is commonly referred to, allows the allotted amount to be removed from one spouse’s account and put into the retirement account of the other spouse without the usual taxes and penalties. Be aware that these orders only apply to pension plans and 401Ks. 

As with any other divorce issue, a Kentucky couple may have numerous questions regarding the division of retirement accounts. Consulting with an attorney could provide the answers needed in order to make the best decision possible for each party. Starting over as a single person once again will undoubtedly have its challenges, but having a solid financial foundation with which to begin could be invaluable.

Source:, “How Retirement Plan Assets are Divided in a Divorce“, Deborah Fowles, Accessed on June 18, 2017

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