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Will My Spouse be Entitled to Part of My 401(k)?

Colorado is an equitable division state when it comes to marital property. This means that the judge will decide on a division of assets that he or she finds to be equitable and fair. If you have a substantial retirement account or 401(k) built up, your 401(k) can be subjected to this division.

Your 401(k) Will be Handled in One of Four Ways

  • You keep your retirement funds, and your spouse receives marital assets of comparable value. Assets can be anything with monetary worth ”“ cars and homes, to name two big examples.
  • You split your 401(k) assets with your spouse. To do this, you will need a Qualified Domestic Relations Order (QRDO). A QRDO is a court order allowing your spouse to receive part of your account. QRDOs can be complicated, and you will be required to speak to both your divorce lawyer and your 401(k) plan administrator before the orders can be finalized.
  • You liquidate the portion of your account needed by a QRDO and pay your spouse with a lump sum. This method has some tax consequences and is generally considered worthwhile only in extreme cases.
  • If you have left your company and are over 59 ½ years old, you can roll your ex’s portion of the 401(k) into an IRA. This is an attractive option as it allows you to separate your funds from your ex’s without any penalties or tax liability.

If you need help determining what the best option is for your 401(k) in your divorce, contact a Denver divorce attorney. The team at Divorce Matters can help answer all of your questions and ensure that you are treated fairly both during and after your divorce