How Are Retirement Accounts Handled During Divorce?

April 22, 2020 O'Connor Family Law Divorce

In Massachusetts, all property that you hold is considered marital property, unless you have a prenuptial agreement that defines it as otherwise. The best way to think about it is imagining that you have a large pot. Everything that you own, whether that’s jointly, individually, with a third party, within a trust, or any other way – all of it goes into the pot.

This includes anything that is an asset as well as liabilities. Massachusetts utilizes equitable division when deciding how assets and liabilities should be granted to each party. Although most cases end with everything being split 50/50, that’s not always the case. Unless there is an agreement about how to split property, the Court will consider a number of factors in deciding who gets what and what percentage for each item that is pulled out of the pot.

The same is true for retirement accounts. If you are concerned about how your retirement accounts will be handled during your divorce, you should speak with a family attorney as soon as possible. Because our attorneys have over 35 combined years of exclusive family law experience, we know how to handle even the most complex situations.


Retirement accounts can be one of the more challenging assets to divide in the event of divorce. Determining the value of these accounts often requires individual methods of accounting and, in some cases, analysis by an actuary. One of the most important documents in a divorce involving retirement asset division is a Qualified Domestic Relations Order (QDRO – to pronounce it, you would say “quadro”). This document is required in order to divide retirement assets such as pensions and 401(k)s to avoid tax and withdrawal penalties.

A QDRO instructs the plan administrator on how to allocate funds to each spouse. A divorce attorney can assist with drafting up a Separation Agreement that lays out the detailed requirements that will need to be included within the final QDRO that meets the requirements of your retirement plan and protects you in the future. More than one QDRO may be required, depending on the diversity and amount of you and your spouse’s retirement assets. With so many moving parts, the procedure to implement a QDRO can be complex. Because plans often vary significantly in terms and requirements, O’Connor Family Law works hand in hand with a certified QDRO specialist to ensure that you and your future retirement are protected.

Certain types of retirement accounts do not require a QDRO to allow the funds to be transferred pursuant to a divorce. For instance, an Individual Retirement Account (IRA) does not require a QDRO and can simply be referred to as a transfer incident to divorce in order to avoid the taxes and penalties of early withdrawal. A transfer incident to divorce is when the account owner transfers part or the entirety of their IRA to their spouse solely because of a divorce.


Retirement accounts are marital property, which means they are subject to equitable distribution. Depending upon the length of the marriage, the funds deposited in the retirement account(s) before the marriage are reserved to the individual who brought them into the marriage rather than being divisible. The longer the length of the marriage, the more likely anything brought into the marriage would also be split though.

For example, if one spouse had $300,000.00 in their 401(k) account prior to getting married, but by the time they got divorce, they had $600,000.00, it’s possible that only the second $300,000.00 would be divisible (so that the other spouse would get $150,000.00 of the total amount). However, the longer the marriage, the more likely that a Judge would require the whole amount to be divisible.

Another example of how retirement accounts are divided equitably is like this: Let’s say the couple got married when they were 23 and hadn’t started investing in their retirement accounts yet. At the time they get divorced, however, the Husband has a 401(k) valued at $500,000.00 and the Wife has a 401(k) valued at $400,000.00. The difference in their two accounts is only $100,000.00. So, in this case, the Husband would end up transferring only a total of $50,000.00 to the Wife’s account pursuant to a QDRO to “equalize” the accounts. Then they both walk away from the marriage with $450,000.00 each in their retirement account.

Even when the court awards a portion of one spouse’s 401k to the other, the retirement plan itself governs the distribution of the funds, but the necessary terms need to be in the divorce judgment in order for the QDRO to be drafted appropriately. A retirement plan will not pay out funds to an ex-spouse without the QDRO being sent to them for approval.

A QDRO typically costs between $400 – $600 per order. In order to try to keep costs down, your attorney will generally insert language into your Separation Agreement that dictates that the accounts should be divided utilizing the least number of QDRO’s possible. For example, let’s say the Wife has 5 different accounts totaling $500,000.00 and the Husband has 3 accounts totaling $150,000.00. This means there is a difference of $350,000.00 between the Wife and the Husband’s accounts which needs to be divided equally with the Wife having to transfer a total of $175,000.00 to the Husband. So long as at least one of the Wife’s accounts held at least $175,000.00, the Parties could simply utilize one QDRO in order to effectuate the transfer.

However, let’s say the Wife only had $100,000.00 in each of her five accounts. She would transfer $100,000.00 out of one and $75,000.00 out of another. To effectuate these transfers, the Parties would need to have two separate QDRO’s, even if both transfers are going into the same account for the Husband. It’s the number of accounts being transferred out of that dictates how many QDRO’s are necessary. Generally, both Parties split the cost of the QDRO’s, and one Party is designated as being responsible for making sure the completed QDRO is submitted to the Court so it can become a viable court order.


If you are concerned about how the court may handle your retirement accounts during your divorce, you should contact O’Connor Family Law. Our extraordinary team of lawyers can explain how the property distribution process may work in your particular case and explain which assets you may be entitled to retain. Our attorneys will work hard to protect your future. Contact our firm today for more information.