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Do I Get Half of My Spouse's 401(k) in a Divorce?
Divorce often involves complex financial matters, especially when it comes to dividing retirement accounts like 401(k)s. Retirement savings accounts typically contain a significant portion of a couple's assets, which makes them a key focus during divorce proceedings. Many people wonder whether they are entitled to half of their spouse's 401(k) or how to divide these accounts. While a simple 50/50 split might seem fair, the division of a 401(k) is more intricate than it may seem. An experienced Illinois divorce attorney can help you understand your rights, negotiate the division of your spouse's 401(k), and ensure you receive your fair share of marital assets, including retirement savings.
Are 401(k) Accounts Considered Marital Property in Illinois?
In Illinois, 401(k) accounts are treated as marital property if contributions were made to it during the marriage. Under state law, marital property includes any assets or income acquired by either spouse during the marriage. This means that any contributions to a 401(k) throughout the marriage are considered marital property and are subject to division during a divorce.
If your spouse had a 401(k) before the marriage, only the portion of the account that grew during the marriage is considered marital property. The pre-marital portion of the account is typically treated as separate property, so it will not be divided during the divorce.
How Is a 401(k) Divided in an Illinois Divorce?
Illinois follows the principle of equitable distribution, which means that marital assets are divided based on what is fair rather than simply splitting everything in half. When it comes to dividing a 401(k), several factors are taken into account, including:
- The length of the marriage
- The age and health of both spouses
- Each spouse's contributions to the marriage (both financial and non-financial)
- The economic circumstances of each spouse after the divorce
- Whether one spouse will receive spousal maintenance
Can We Agree on How to Divide the 401(k)?
Divorcing spouses have the option to reach their own agreement on how to divide retirement accounts. If both parties can reach a fair and mutual decision, the court will generally honor that agreement as long as it meets legal requirements.
In some cases, one spouse may agree to receive a larger share of other marital assets in exchange for waiving their right to the 401(k), or vice versa. Negotiating a settlement can be a practical way to simplify the division of assets and avoid prolonged court proceedings.
What Is a QDRO, and Why Do I Need One?
A Qualified Domestic Relations Order (QDRO) is a legal document that is required to divide a 401(k) or other employer-sponsored retirement accounts during a divorce. The QDRO instructs the plan administrator to distribute a portion of the account to the non-employee spouse.
A QDRO ensures that the account division complies with divorce law and IRS regulations. Without a QDRO, withdrawing funds from a 401(k) could result in early withdrawal penalties and tax liabilities.
Contact a Kane County, IL Divorce Lawyer
If you are going through a divorce and need help dividing a 401(k), an experienced St. Charles, IL divorce attorney at Shaw Sanders, P.C. can guide you through the process. Call 630-584-5550 today to schedule a free consultation and learn how we can help you protect your financial future.
630-584-5550