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What will happen to my 401(k) after divorce?

| Sep 30, 2020 | Divorce

Many residents of Connecticut have active 401(k) plans through their employers. Others may have different types of retirement plans, such as a pension or a defined contribution plan.

A lot of people in the New London area and the other communities of Eastern Connecticut may have some of their wealth tied up in these plans, particularly if they are over 50 and have been investing in their 401(k) plans for many years.

Retirement plans will be divided during a divorce

Retirement plans, like homes and other property, are subject to division during a divorce.

Connecticut is an equitable division state, which means a court will divide marital property fairly between the spouses without regard to legalities like whose name the property is in. The law serves as a guide for judges in deciding what sort of property division would be fair.

While there may be some question as to whether all or part of a retirement plan is marital property, generally speaking, a person who owns one of these plans can expect to share it with their former spouse.

The issue will be to make sure that the division is legally fair, and doing so may require the assistance of an experienced Connecticut family law attorney.

There are also practical concerns with dividing a 401(k)

Unlike other property, dividing a 401(k) or another tax-protected retirement plan is not merely a matter of having a judge enter an order and then following it.

One of the spouses must also submit a Qualified Domestic Relations Order, or QDRO, to the judge for signature and then to the custodian of the retirement plan. The QDRO must give detailed instructions about how to divide the retirement plan, and how to do so without adverse tax consequences.

An improperly drafted QDRO can mean that a person does not get their fair share of the retirement plan or could cause unnecessary delays and tax consequences.

Attorney Jeffrey Hill and Paralegal Patricia Latham quickly and efficiently prepare Qualified Domestic Relations Orders for individuals who have recently gone through a divorce.