A 401(k) retirement savings plan is one of the best employer-sponsored retirement plans that can help you save for your later years. However, 401(k) retirement accounts may be subject to division during divorce. It’s critical that you understand what might happen to your 401(k) during your divorce.
How Does Marital Property Work With a 401K in Colorado?
Colorado is an equitable distribution state. Marital property is any property the spouses acquired during the marriage, regardless of whose name is on the title, with a few exceptions. Here, all marital property is subject to division in a way the court deems just and equitable. This does not necessarily result in an equal 50/50 split of the property. The court considers relevant factors when making property division decisions, including:
- The contribution each spouse made to the acquisition of marital property, including contributions as a homemaker
- The value of each spouse’s separate property
- Each spouse’s economic circumstances, including the desirability of awarding the family home or the right to live there to the spouse who has primary child custody
- Any decrease or increase in the value of either spouse’s separate property
Is My Spouse Entitled to My 401K During Our Divorce?
If your retirement account was started during the marriage, it’s typically considered marital property and your spouse may be entitled to it. However, if your retirement account were started before the marriage, that portion of the account would be separate property, but the contributions and earnings realized during the marriage would be marital property. Separate property also includes any accounts received by gift, inheritance, proceeds from separate property, or under the terms of a valid prenuptial or postnuptial agreement.
Spouses who do not have a 401(k) account either because they have different retirement accounts, don’t work outside the home, or are not offered these accounts through their employer could receive all or a portion of a retirement account. This may be particularly helpful for spouses who quit their jobs to raise children but want a more financially secure future. Please note, it’s beneficial to discuss your specific situation with a divorce lawyer who knows Colorado law to fully understand your options.
How Can My 401K Account Be Split in a Divorce?
If a couple can agree on how to treat their retirement account, they can present this agreement to the court. Some options may include:
- Each spouse keeps the retirement account that is in their own name.
- The spouses split each account equally and transfer an equal portion to their spouse.
- The spouses split the account in a different manner.
- A spouse forfeits the ownership of other property to keep all of their retirement accounts.
Whether the spouses can reach an agreement regarding their retirement account or the spouses ask the court to determine what happens to the accounts, the process of dividing these accounts typically involves the following process:
- Identifying all of the accounts to be divided
- Valuing the account and previous values of the account
- Determining how to divide the account
- Completing a Qualified Domestic Relations Order (QDRO) that instructs the plan administrator how to divide the account
- Waiting for distribution
Contact Our Experienced Divorce Lawyers for Help
If you are concerned about what will happen to your 401(k) during a divorce, contact Stahly Mehrtens Miner LLC. Our knowledgeable attorneys understand the laws related to this complex matter and can work tirelessly toward your desired resolution. Call us at (303) 797-2900 to schedule a consultation today.