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Division of 401(k) assets in high-asset divorces

On Behalf of | Jan 25, 2022 | Asset Division, Divorce

High-asset divorces in Tennessee often involve retirement packages like a 401(k). While using guidelines to rule on the division of assets, the court will assess the unique circumstances of each case.

What to know about dividing a 401(k)

In general, 401(k)s are usually hybrid assets. That means portions are separate and other portions are marital. Investments prior to the marriage are the owner’s property, and any contributions made during the union are marital. Those contributions are liable to equitable division in a divorce.

The legal path for dividing a 401(k) requires a qualified domestic relations order, or QDRO. If there are pensions that are not divisible, a QDRO isn’t necessary.

Factors involved in determining the division

The court will use the law and mandated guidelines. It will also take into account other factors in a high-asset divorce such as:

  • Length of the marriage
  • Age, health, skills, future earning capacity, employment, personal needs and financial resources of each spouse
  • Value of each spouse’s non-marital property
  • Social Security benefits
  • Tax consequences
  • The spouses’ contributions to each other’s earning potential
  • Contribution to the value of the 401(k)

Arguing the division

One spouse may claim a right to 401(k) assets with the other spouse arguing the opposite. In this case, the claimant must evidence their right with a set of documents.

  • Annual benefit statements
  • Description of benefits, terms and conditions
  • Forensic valuation that demonstrates what assets are worth
  • Plan administrator text on their QDRO process

Are you entitled to your spouse’s retirement assets?

All marital property is subject to division. There are no guarantees, but you could be eligible for at least a portion of a spouse’s 401(k). However, if the spouse left a job with a 401(k) in place before the marriage, those assets are strictly off-limits. Understanding these issues is vital when splitting property during a divorce.