The Division of a 401k in a Divorce

Pierre Domercq Divorce

Retirement accounts such as a 401k are often one of the largest assets in a North County San Diego divorce. Is your personal 401k yours to keep, or is it like any other asset in your divorce – to be divided evenly by the community?
Most retirement plans such as military pensions and veteran’s educational benefits, IRA’s, 401(k)s, 403 plans, employee stock option plans, Keoughs, defined benefit plans and ERISA plans are considered to be “community property” in California, and as such are subject to a 50-50 division.
Other retirement vehicles and benefits such as Social Security, workers compensation disability and payments for military injuries are not community property.
Community property is to be divided equally. How is this accomplished with a 401k? The division of a 401(k) is actually a separate legal process from the divorce, but this should be clearly addressed in the separation agreement and handled at the same time as the divorce itself.
The division of a 401k requires a “Qualified Domestic Relations Order” or QDRO (often pronounced like “cue-drow” or “quad-drow”). The QDRO is a legal order telling the administrator of the 401k how to divide the retirement account. This legal order should be accomplished and processed immediately following the divorce orders.
Many 401k plan administrators have their own standardized QDRO and will not accept any other order or format. The legal terms contained within the QDRO must be very specific. There are often tens or hundreds of thousands of dollars at stake, so this is one of the most important steps in any divorce.
Based upon our decades of experience and expertise in North County property division cases, we can tell you that these amounts can often be used to offset other assets such as business ownership interests, or the community interest in the family home. While the 401k itself is calculated as part of the community the ultimate division of the actual account can be quite different.
Many self-represented Californians miss the QDRO as part of their divorce process. Some partners misunderstand (or misrepresent) the manner in which retirement assets should be handled. This is why it is so important to work with experienced and proven attorneys at Burke and Domercq.
We invite you to contact us or call 760-712-3741 to schedule an appointment with one of our seasoned attorneys.