How Is My 401K or Pension Divided In a New Jersey Divorce?

By Lois G. Schwartz | March 15, 2020

401k divorce

It is normal to have a lot of questions during a divorce. When you’re married for an extended period of time, you build your lives together, sharing and combining assets. Determining how you will divide those assets with a divorce can be difficult. One person might feel more entitled to the assets and state laws can dictate who gets what in a divorce.

Determining Retirement Account Ownership in a Divorce

Individuals contribute to their 401K and pension accounts to prepare for retirement. When contributing to these accounts, chances are, you never considered retiring without your spouse in the picture. New Jersey is an equitable distribution state, which means that they consider all retirement and pension accounts to be shared equitably. In most cases, couples equally divide all retirement funds from the date of the marriage to the date of the filing of a divorce complaint. This covers all types of retirement funds, including:

  • Pensions
  • 401K
  • 403B
  • Traditional or Roth IRA

It is important to note that equitable  distribution does not necessarily mean 50/50. While many cases are determined in an even split, it is more geared at ensuring that the division is fair. This might lead to other forms of agreements including negotiating other assets in return for 100% of the retirement fund.

The Importance of a Qualified Domestic Relations Order

A Qualified Domestic Relations Order (QDRO) is the name of the document that directs the administrator of a retirement fund to divide the funds between the parties at the time the pension goes into pay status. In addition to ordering the pension to be divided, a QDRO also removes tax liabilities that they would otherwise be subject to liquidating if the fund was distributed outright.  

Unique QDRO Agreements

It is possible to come to an agreement regarding the division of retirement assets during the divorce proceeding. For example, each spouse might agree to retain the ownership of his/her retirement account, especially in cases where both spouses have a similar amount in his./her their own retirement accounts.

It is also possible for the couple to come to another type of financial agreement during the divorce proceeding. In most divorces, the parties enter into a Marital Settlement Agreement (MSA)  which addresses all issues of the marriage. One of the issues will be the division of retirement accounts. There are situations where there may be on offset in the distribution of assets whereby one partner maintains 100% ownership of a retirement account or pension in return for fewer assets accepted in other areas of the division of marital property.

For example, one spouse might sign over their rights to a retirement account in lieu of keeping 100% of the house. While these unique situations are possible, it is always a good idea to discuss the details of your divorce case with an experienced divorce lawyer. Making adjustments to the legal agreement after it is signed is usually impossible, so it is important to consider all your needs/negotiations ahead of time.

Contact a Cherry Hill Family Law Attorney for a Consultation About Divorce in New Jersey Today

If you are thinking about filing for divorce, or if you have already started the divorce process and are dealing with another matter such as child custody, child support, or division of assets, you need to speak with a qualified attorney. Family law attorney Lois Garber Schwartz, Esq. represents clients throughout the state, including Camden, Cherry Hill, Gloucester Township, and Winslow, New Jersey. We understand how challenging this time can be for you, which is why we will fight hard to protect your interests, and the interests of your loved ones, throughout the legal process. Call us at (856) 482-8799 or fill out our confidential contact form to schedule a consultation. We have an office conveniently located at 1040 Kings Highway, Suite 202, Cherry Hill, NJ 08034.

The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.

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    Lois Garber Schwartz

    1040 Kings Highway N., Suite 202

    Cherry Hill, NJ 08034


    Phone: 856-375-8989

    Fax: 856-482-0343