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401(k) considerations during divorce proceedings

Divorce proceedings in Florida present separating couples with a number of complexities. Many of these relate directly to property division, where many often have questions regarding the separation between marital and separate property. Retirement funds (specifically 401(k) accounts) typically represent particular sources of confusion.

Most might assume a 401(k) account to be separate property given that it typically only exists as a result of one’s individual employment efforts. However, contributions made to a 401(k) during a marriage come from marital income, thus making them marital assets and subject to property division. This then prompts the question of how family courts divide such funds.

Splitting up a 401(k) during divorce proceedings

During property division proceedings, the court often issues a Qualified Domestic Relations Order. This order permits a 401(k) plan provider to make disbursements to an alternate payee. This allows for the splitting of a current fund into 2 separate accounts (with each spouse then assuming investment control of their respective funds).

Many may question whether they might be able to withdraw the 401(k) funds due to them. Under normal circumstances, such an action nets an early withdrawal penalty (up to 10% of the amount withdrawn). However, according to the website, one can request that their QDRO permit an early withdrawal without penalty.

Retaining one’s full 401(k)

One contributing to a 401(k) account might want to retain their full fund. Per the 401(k) Help Center, this may be possible, yet it requires that one convince their ex-spouse to forego the interest in the 401(k) due to them. To do this, one likely would need to give up their stake in another marital asset of comparable value in return.


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