When a couple divorces, several important issues need to be resolved before the divorce can be finalized, including spousal support, custody arrangements, and child support. In addition, the couple’s marital property and financial assets will need to be divided. This includes the marital home, bank accounts, life insurance policies, pensions, and retirement accounts like a 401(k).
New Jersey is an equitable distribution state, meaning marital property is divided equitably rather than an automatic 50/50 split. While this may come as a surprise, a spouse’s 401(k) plan is often considered marital property, meaning it can be subject to equitable division in a divorce. If you are going through a divorce, you may be entitled to a percentage of your spouse’s 401(k).
What Factors Are Considered When Dividing Marital Property?
When determining how to divide marital assets, including retirement accounts, the court will consider a range of factors, including but not limited to the following:
- The length of the marriage.
- The age of each spouse.
- The income and property that each spouse brought to the marriage.
- The contributions that each spouse made to the marriage.
- The physical and mental health of each spouse.
- Any debt that both parties have accumulated.
- The standard of living that the spouses enjoyed over the course of the marriage.
- The earning capacity of each spouse.
How Is a 401(k) Divided in a Divorce?
A 401(k) account is generally considered marital property subject to equitable distribution. The account’s value may be substantial if your spouse has been contributing to a 401(k) plan for many years. The portion of the account you are entitled to will depend on whether the account was established before the marriage and the contributions made after you were married.
What Is a Qualified Domestic Relations Order (QDRO)?
A QDRO is a court order made by a judge that tells the administrator of a retirement account to divide the account. Without a signed QDRO, the account owner could face significant taxes and penalties for withdrawing funds early. In addition, the QDRO gives authority over the retirement plan, not the divorce action. The QDRO will direct the administrator on how to direct the funds in compliance with the divorce settlement terms.
How Can a Divorce Lawyer Help Me With My Settlement?
The process of dividing marital property can be complicated, particularly when there are complex retirement accounts that have accumulated a substantial value and are subject to equitable division. A highly skilled divorce lawyer will determine whether you are entitled to your spouse’s 401(k), ensure that a QDRO is completed, and identify all sources of marital property you are entitled to in the divorce.
The Toms River Divorce Lawyers at Zeigler Law Group, LLC Protect the Legal and Financial Rights of Clients During Divorce
If you and your spouse are seeking a divorce, the Toms River divorce lawyers at Zeigler Law Group, LLC will assist you with every step of the divorce process, identify all sources of marital property that you are entitled to, including your spouse’s 401(k), and pursue the best possible settlement outcome. To schedule a free consultation, call us today at 732-361-4827 or contact us online. Our offices are located in Toms River, Red Bank, Princeton, and Mount Laurel, New Jersey, where we serve clients in Ocean County, Monmouth County, Mercer County, and Burlington County.