A 401(k) account is a leading way that people save for retirement in Florida. In a high-asset divorce, the funds in a 401(k) may be significant. These funds are divisible as part of the marital assets. In order for each party to receive an equitable division of the assets, it’s important for them to understand how it’s possible to split a 401(k) in divorce.
Can a spouse take part of a 401(k) in divorce?
Yes, a spouse can take part of a 401(k) in a divorce. Even if one of the parties is the one directly working and has the 401(k) account in their sole name, it’s still marital property. Both parties may make a claim to the funds. In Florida, the court makes an equitable distribution of the assets. The court divides the marital property equitably between the parties. Equitable does not necessarily mean equal.
The court may award all of a 401(k) to one of the parties. It may also split the 401(k) between both parties. A spouse has an equal claim to the 401(k) in a divorce regardless of whether they are listed on the account.
How to split a 401(k) in divorce
To split a 401(k) in divorce, the parties need to create a Qualified Domestic Relations Order (QDRO). A QDRO provides the fund manager the information that they need in order to create a new account and split the funds. The plan manager has to honor the QDRO. However, they don’t have to allow changes to the terms of the 401(k) plan that aren’t allowed in general for plan participants.
Fair treatment for a 401(k) in divorce
In order for a 401(k) to be included in a divorce, a party must claim it as a marital asset. Fair treatment includes valuing the 401(k) and arguing for equitable distribution. The court may order the parties to cooperate in executing a QDRO to divide the asset.