Splitting 401K in Divorce
When considering separation and divorce in the state of New Jersey, one of the most important factors is thinking about equitable distribution of property. In most cases, property is distributed fairly, but with a consideration towards which spouse contributed more towards a particular asset. Retirement related funds however, such as a 401k plan, are different.
Passaic County courts follow the same rule of thumb as other courts in NJ. That is, any money put into the 401k account from the beginning of the marriage up until the date divorce is filed for is subject to equitable distribution. This includes interest accrued as well as any deposits made by either the employee or the employer. If you are unsure when you opened your account, or how much was deposited and when, speak with your Plan Administrator as they will have a complete record of all activity on this account.
Typically, these assets get divided once the divorce has been finalized, although it is possible that during the divorce litigation process one party agrees to let the other spouse retain all of the retirement assets, usually in exchange for a different asset.
Qualified Domestic Relations Order in New Jersey
If it is decided, however, to divide the assets of 401k plan, you will need to file a QRDO, Qualified Domestic Relations Order. This is a document which designates a person other than the participating employee to be eligible to receive all, or a portion of, the employee’s retirement account. A QRDO is necessary to divide many types of common retirement accounts, as well as to avoid tax penalties when withdrawing or moving funds from said accounts.
A QRDO must fulfill very specific and strict standards in order for it to be enforceable and valid by law. It is imperative that your attorney be familiar with these documents in order to avoid costly mistakes.
Division of Assets in High Net Worth Divorce Cases Across Passaic County, NJ
In general, individuals involved in high net worth divorces require a team of experienced specialists, trained to navigate the intricacies of a couple’s wealth and holdings. In many cases your attorney can only be as effective as the team he enlists to litigate on your behalf. If you have any questions regarding complex property division, separation of businesses, or the division of retirement assets in your divorce, or if you have already gotten divorced but have yet to divide retirement assets, please contact us to schedule a free consultation with one of our qualified family law attorneys experienced in divorce and equitable distribution law here in New Jersey.