How Long Do You Have to be Married to Get Half of 401(k)s?

401(k) money may be one of the most important retirement savings you may own. A 401(k) account allows employees to set aside a portion of their monthly paycheck for their golden years. If you decide to get a divorce from your spouse, you can claim up to half of their 401(k) savings. Similarly, your spouse can also get half of your 401(k) savings if you divorce.

Usually, you can get half of your spouse’s 401(k) assets regardless of the duration of your marriage. There is no specific threshold for the length of a marriage that results in a 401(k) being divided equally. However, you will only get a share of the 401(k) contributions made during the marriage, since contributions made before marriage are considered separate properties of the spouse.

Will I Get Half of His 401(k) If We Have Been Married for Three Years?

If you have only been married for three years and you want to get a divorce, you can still get a share of the 401(k) and other marital property that has accrued during the marriage. Marital property includes real property (house and rental properties) and personal property acquired during the marriage but before separation.

For example, if your spouse has accumulated $1,000,000 in his/her 401(k) over their 30 years of employment, and only $30,000 was contributed during the marriage, you can only get a share of the $30,000 401(k) savings and not the $1,000,000. Therefore, you can get up to 50% of the $30,000 i.e. $15,000. However, depending on your state division rules, it may not be an automatic 50-50 split.

Will I Get Half of 401(k) If We Have Been Married for 20 Years and I Was Not Working?

Contributions to a 401(k) during a marriage are considered community property, thus should be split between legally married couples. If you have never been gainfully employed outside your home, and you spent most of the years taking care of the home and supporting your spouse's career, you are entitled to a share of marital property, including the spouse's 401(k) savings) if you or your spouse files a divorce.

Assuming that your spouse has accumulated $1,000,000 over the 20 years, and all the 401(k) contributions were made after the date of your wedding, and before your separation, you are entitled to half of their accumulated 401(k) savings and other marital property. However, if only $500,000 was contributed during the marriage, and the other $500,000 was contributed before you married, you are only entitled to the $500,000 contributed during the marriage. Assuming you split 50-50, it means you will get $250,000 of his retirement savings, which is ¼ of the overall 401(k) balance.

Can Your Spouse Withdraw Money from a 401(k) Before Divorce?

If your spouse has attained retirement age i.e. 59 ½ years, it means that they can start taking distributions without incurring the 10% penalty tax. If you are worried that your partner will withdraw all or most of their retirement savings to protect them from divorce settlements, you can file a standing order to maintain the status quo during the divorce proceedings.

The court may treat large withdrawals from a 401(k) account before or during divorce proceedings as an advance of the spouse's share of the marital property that is due to both parties. Therefore, the court may consider the withdrawals when determining the value of the marital property, and the spouse may be required to reimburse some of the funds withdrawn to meet the divorce settlement.

Rules for Dividing 401(k) Plans

401(k)s and pensions are considered qualified plans for tax purposes, and they are subject to Section 401 (a) of the US Tax Code. These funds can only be split through a Qualified Domestic Relations Order (QDRO), which allows parties to distribute funds in their qualified retirement plan to their spouse. In the absence of a QDRO, the plan administrator will not disburse the funds to the other spouse.

If you and your spouse agree to get a divorce, you need to consult your divorce attorney on the terms of a QDRO. The QDRO is drawn by a judge, and it demands that a portion of the 401(k) be disbursed over to an alternate payee. Once it is signed, the attorney sends it to the 401(k) plan administrator, who must approve the order and initiate the distribution. If the plan administrator rejects the plan, it must provide reasons for the rejection, and the parties should amend the order and resubmit it for approval.

How Long Does a QDRO Take?

Typically, a QDRO can take anywhere from two months to three months from the time it is drafted to when it is executed. Sometimes, if there are submission errors or if the divorce is final, it can take several more months or years to split the 401(k) money between the spouses.

When drafting a QDRO, both spouses should involve divorce attorneys to ensure that they comply with all retirement plan requirements. Once both parties agree on the QDRO terms, they must submit it to the court for signature and filing. A certified copy of the signed order is then sent to the 401(k) plan administrator, who must deem the order as qualified and issue an interpretation letter.

After approval, the funds can take anywhere from two weeks to five weeks to reach the spouse's account. The spouse can opt to receive part of all of the transfer as a cash distribution, or choose to rollover the 401(k) into a 401(k) or IRA.