You worked hard for years and saved for retirement, but now you are also facing a divorce. What will happen now? Will you still have enough left to spend your retirement years as you dreamed after the dust settles?
As with other marital assets, the answer will depend on a number of factors, which include the overall value of your assets and debts, the length of the marriage, and how long you’ve worked at your current job. For those who had savings in a 401(k) or retirement account prior to the marriage, the court will consider this amount separate property, which will affect the overall division of the retirement account. In addition, federal and state government workers with FERS and VRS plans also have access to a pension, which the court may consider marital as well. If you have worked a significant amount of time for a government employer prior to the marriage, you will certainly want to contact an experienced family law practitioner prior to signing any sort of separation agreement to figure out who much your soon to be ex-spouse can possibly receive.
It is always best to be prepared when faced with the retirement asset distribution in a divorce. First, obtain a copy of your summary plan document. A summary plan document is a “manual” that your employer’s retirement plan administrator uses to calculate the benefits you will receive upon retirement. Second, immediately obtain a copy of your 401(k) balances and benefits that existed at the time of separation from your spouse, as well as what the balances were at the time that you entered into the marriage. This will help give your attorney an idea of will be considered marital. Third, do not move or withdraw any money from existing retirement accounts until you consulted with an attorney. You could face tax penalties or other legal consequences. Finally, consult with your financial advisor and CPA to help determine a long term strategy.
Understanding Divorce and Retirement Account Division in Virginia
Before getting into the mechanics, it helps to understand the big picture of divorce and retirement account division in Virginia. Virginia is an equitable distribution state, not a community property state — meaning the court divides marital property fairly, but not automatically 50/50. Under Va. Code § 20-107.3(G), a judge cannot award a non-owning spouse more than 50% of the marital share of a retirement account. The “marital share” is only the portion of the account earned between the date of marriage and the date of separation; contributions made before the marriage, or after separation, remain separate property.
A Simple Example
Say you had $80,000 in your 401(k) on your wedding day, and the balance grew to $200,000 by the time you separated. The $80,000 you brought into the marriage stays separate. The remaining $120,000 in growth and contributions during the marriage is the marital share, and it’s this $120,000 — not the full $200,000 — that the court divides. A 50/50 split of the marital share would give your spouse $60,000, though the court may award more or less based on the statutory factors.
How a 401(k) or Pension Is Actually Divided: The QDRO
Your divorce decree alone does not move a dollar out of an employer-sponsored retirement plan. For 401(k)s, 403(b)s, and most pensions — plans governed by the federal Employee Retirement Income Security Act (ERISA) — you need a separate court order called a Qualified Domestic Relations Order (QDRO). A QDRO instructs the plan administrator to pay a specific dollar amount or percentage to the “alternate payee” (the non-employee spouse) directly from the plan, without triggering the 10% early withdrawal penalty. A QDRO must be signed by a judge and then approved by the plan administrator before it becomes effective — the process commonly takes 60 to 120 days, and drafting fees (often shared between spouses) typically run a few hundred dollars per order. If a QDRO is never entered and the account owner retires, remarries their benefit, or passes away first, the other spouse can lose their share entirely — so this step should never be delayed.
IRAs Work Differently — No QDRO Required
Individual Retirement Accounts (IRAs), including Roth IRAs, are not governed by ERISA, so they do not require a QDRO. Instead, an IRA is divided through a “transfer incident to divorce” under the terms of the divorce decree or settlement agreement. Handled correctly, the transfer avoids taxes and the early withdrawal penalty. The custodian generally just needs a certified copy of the decree spelling out the division.
Federal, Military, and State Government Pensions
Richmond is home to a large number of federal, state, and military employees, and their retirement benefits follow different rules than private-sector plans. Federal Employees Retirement System (FERS) and Virginia Retirement System (VRS) pensions are considered marital property to the extent earned during the marriage, but they are divided using a court order specific to that plan rather than a standard QDRO. Thrift Savings Plan (TSP) accounts use their own order form. Military pensions are governed by the Uniformed Services Former Spouses’ Protection Act (USFSPA) and have their own eligibility rules, including the often-misunderstood “10/10 rule” for direct payment from the Defense Finance and Accounting Service. If you or your spouse worked for a government or military employer for any part of the marriage, raise this with your attorney early — these plans are frequently drafted incorrectly by attorneys unfamiliar with them.
Does Divorce Affect Social Security Benefits?
Social Security is not an asset the court divides, but divorce can still affect your benefits. If your marriage lasted at least 10 years, you are 62 or older, and you are currently unmarried, you may be able to claim a spousal benefit worth up to 50% of your ex-spouse’s benefit — without reducing what they receive. If your ex-spouse passes away, you may also be eligible for a survivor benefit worth up to 100% of their benefit, as early as age 60 (age 50 if disabled).
Steps to Protect Your Retirement Before and After Divorce
- Request your summary plan description from each retirement plan so you and your attorney know exactly how benefits are calculated.
- Pull account statements showing balances both at the date of marriage and the date of separation — this is what separates marital from separate property.
- Do not withdraw, borrow against, or move funds in any retirement account while the divorce is pending without talking to your attorney first.
- Confirm who is responsible for drafting and paying for the QDRO in your settlement agreement, and don’t assume it’s automatic.
- After the divorce is final, update beneficiary designations on every retirement account and life insurance policy — a QDRO does not update these on its own.
- Talk to a financial advisor or CPA about the tax impact of any account you keep, sell, or roll over.
FAQs
What Happens To Retirement Accounts In A Divorce?
In Virginia, any portion of a 401(k), pension, IRA, or other retirement account that was earned or contributed to during the marriage is treated as marital property and is subject to equitable distribution. Funds contributed before the marriage generally remain separate property. The court can award the non-owning spouse up to 50% of the marital share, and the transfer is carried out through a Qualified Domestic Relations Order (QDRO) or, for IRAs, a transfer incident to divorce.
Is My 401(k) Considered Marital Property In A Divorce?
Only the portion of your 401(k) that grew during the marriage is marital property. Contributions and growth from before the wedding date remain your separate property, provided you can document the pre-marriage balance with account statements.
Do I Need A QDRO To Divide My Retirement Account?
Yes, if the account is an employer-sponsored plan governed by ERISA, such as a 401(k), 403(b), or pension. A QDRO is a separate court order, signed by a judge and approved by the plan administrator, that instructs the plan to pay a share directly to the non-employee spouse without triggering an early withdrawal penalty.
How Much Of My Spouse’s Retirement Can I Get In A Virginia Divorce?
Under Va. Code § 20-107.3(G), a Virginia court cannot award a spouse more than 50% of the marital share of a retirement account. The marital share is only the portion earned between the date of marriage and the date of separation — not the account’s full balance.
Are IRAs Divided The Same Way As A 401(k) Or Pension?
No. IRAs are not governed by ERISA, so they don’t require a QDRO. Instead, IRA funds are split through a “transfer incident to divorce,” using the divorce decree itself to direct the custodian, which avoids taxes and penalties when done correctly.
How Long Does It Take To Get A QDRO After Divorce?
Drafting, court approval, and plan administrator review typically take between 60 and 120 days after the divorce decree is entered. Delays are common when the order’s language doesn’t match the plan’s specific requirements, so it should be reviewed by an attorney familiar with QDROs before filing.
Can I Collect Social Security On My Ex-Spouse’s Record After Divorce?
You may qualify for benefits on your ex-spouse’s earnings record if the marriage lasted at least 10 years, you are 62 or older, and you are currently unmarried. This does not reduce your ex-spouse’s own benefit, and you’ll receive whichever amount is higher — your own benefit or up to 50% of theirs.
What Happens If I Withdraw Retirement Funds Before The Divorce Is Final?
Withdrawing or moving funds from a retirement account before your divorce is finalized can trigger tax penalties, be treated as marital waste by the court, and result in an unequal award to offset the withdrawal. Always consult your attorney before touching a retirement account during a pending divorce.
For more information about any of the above, or for any family law, criminal law or personal injury matter, please contact the firm.
This post is provided as an educational service and should not be construed as legal advice. Readers in need of assistance with a legal matter should retain the services of competent counsel.
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