DO I HAVE TO SHARE MY 401(K) WITH MY EX?

by Van Den Heuvel Law Office

Property distribution is often one of the most complex aspects of a Michigan divorce, and this is particularly true when one or both spouses have retirement accounts and other investments, such as a 401(k). One common question asked by the clients at the Van Den Heuvel Law Office is whether a spouse has to share their 401(k) retirement account in a divorce, and the answer is that it depends. If you have questions about property distribution or other matters in your Michigan divorce case, call or contact our office now to schedule a consultation.

Separate and Marital Property

The first question that must be answered in any property division case is whether an asset is considered separate or marital property. Any property that was acquired by a spouse prior to the marriage is considered separate property and reverts to them in a divorce, whereas any property that was acquired during the course of the marriage is considered marital property and subject to division in a divorce.

If the assets of a 401(k) were invested prior to the marriage, it will likely be considered separate property so long as no additional funds or active participation on the part of the spouse during the marriage increased the retirement account’s value. However, if any assets were invested during the course of the marriage, that portion of the 401(k) account would be considered marital property and subject to equitable distribution in a divorce. It is important to note, however, that acquiring a portion of a 401(k) and similar retirement accounts is not as easy as making a basic withdrawal.

Qualified Domestic Relations Orders

401(k) retirement accounts, pensions, profit-sharing plans, and deferred compensation plans are all subject to the Employee Retirement Income Security Act of 1974 (ERISA). Under ERISA, any withdrawal from these types of accounts must be made through a qualified domestic relations order (QDRO). If a portion of a retirement account is subject to division, the spouse whose name is on the account is called the participant, and the spouse receiving a portion of the account is known as the alternate payee.

The alternate payee must include a QDRO as part of the final divorce agreement in order to secure a portion of these types of accounts. The QDRO authorizes the administrator of these accounts to redirect a portion of the fund to an alternate payee, who is then able to roll those funds into an individual retirement account (IRA) without being subjected to penalties. To learn more about the distribution of retirement funds work in Michigan, talk to our office today.

Call or Contact Our Office Now

At the Van Den Heuvel Law Office, we understand the complexities involved in dividing a marital estate. If you have additional questions about the division of assets in your marriage and would like to learn more, call the office or contact us now to speak with an experienced Michigan family law attorney.

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