All You Need To Know About Dividing Retirement Assets After Divorce 

 March 4, 2022

Divorce is never easy, but when it comes to dividing retirement assets, it can get downright complicated. If you are going through a divorce and have questions about how to split up your retirement savings, you are not alone. In this article, you will learn about the things you need to know about dividing retirement assets after divorce. 

Changing Beneficiaries 

One important change that will probably happen is the beneficiaries who are entitled to the retirement assets. When it comes to pension and retirement division after a divorce, you need to know that the beneficiary designation supersedes any language in the divorce decree. So, if you don’t make changes to your retirement account’s beneficiaries, your ex-spouse will still get the money even if the divorce decree says otherwise. To change your beneficiaries, you’ll need to file a new form with your plan provider.

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It’s also important to know that changing the beneficiaries on your life insurance policy works differently. You can name anyone as a beneficiary on your life insurance policy, regardless of what your divorce decree says. So, if you want to make sure that your children are taken care of after you’re gone, be sure to update your life insurance policy accordingly. 

Basic Rules

There are certain rules that you need to know about dividing retirement benefits after a divorce. The first rule is that the court will divide the retirement assets as part of the property settlement agreement. This means that the retirement benefits will be divided between the spouses based on their respective ownership interests. 

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The second rule is that the retirement benefits may be subject to division if they were accumulated during the marriage. This means that if you have been married for 20 years and have accumulated $100,000 in retirement benefits, your spouse may be entitled to half of those benefits. 

The third rule is that the court may award a portion of the retirement benefits to a spouse who is not employed or who has a lower income than the other spouse. This is known as an “equitable distribution” of assets and is based on the premise that each spouse should have an equal share of the marital assets. 

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Types Of Retirement Accounts 

It’s also smart to know about all the types of retirement accounts. These are the following:

  • 401(k)
  • 403(b)
  • 457(b)
  • Traditional IRA
  • Roth IRA
  • SEP IRA
  • SIMPLE IRA
  • Self-Employed 401(k)
  • Profit-sharing Plan
  • Defined Benefit Plan
  • Cash Balance Plan
  • Employees Stock Ownership Plan (ESOP)
  • Annuity

The way they are divided in a divorce will be dependent on the type of account it is. For example, traditional IRAs are subject to equitable distribution like other marital property. However, Roth IRA’s are not because they are funded with after-tax dollars.

Some types of retirement accounts have penalties for early withdrawal. It’s important to be aware of these so you don’t accidentally take money out that you’re not supposed to. 

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What Happens To The Funds  

The funds in your retirement account are yours and can be distributed in any way you see fit after a divorce. You may choose to keep them in the account and continue to grow them, or you may choose to take some of the funds out and invest them elsewhere. There are no right or wrong answers when it comes to dividing retirement assets after divorce, but there are some things you should consider before making any decisions.

Talk to a financial advisor about your options and what would be best for your individual situation. Make sure you understand all of the tax implications of taking funds out of a retirement account. 

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Requirements For Dividing Accounts 

The requirements for dividing accounts are important to know about dividing retirement assets after divorce. There are a few requirements that must be met in order to divide accounts. 

First of all, the couple must have been married for at least ten years, and one spouse must be at least age 62. Also, the account must have been opened prior to the date of marriage.

If these requirements are not met, the couple will not be able to divide the accounts. They will need to get a court order to do so. Once the requirements are met, the couple can begin the process of division. 

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The QDRO 

The qualified domestic relations order, or QDRO, is a tool used to divide retirement assets after divorce. It’s important to know about the QDRO if you are going through a divorce and have retirement assets, such as a 401(k) or pension.

The QDRO is a court order that is entered as part of the divorce decree. The order directs the retirement plan administrator to pay all or part of the benefits to the alternate payee, who is typically the ex-spouse.


Divorce is a complex process, especially when it comes to retirement assets, which means the beneficiaries will change and that there are basic rules you need to know. All this depends on the type of retirement account and you need to know where the funds go and what the requirements for dividing these are. Finally, another thing you should know about is the QDRO. Doing research will help you solve this issue faster! 

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