Dividing retirement accounts at the end of a marriage

For most people, divorce comes as either a shocking surprise or a product of mutual understanding. Regardless of whatever category you fall under, you likely have major concerns as they relate to property division. Specifically, you may be wondering who gets the house, the cars, the vacation properties and — of particular concern if you’re older — the retirement accounts.

First, it important to remember that Texas is a community property state. This means that generally any property obtained during the marriage is split 50/50 in terms of ownership interest between spouses. During property division, the assets are valued and divided between the soon-to-be exes.

Second, if you or your former spouse have several retirement accounts — 401(k)s, profit-sharing, pension plans, IRAs — a qualified domestic relations order (QDRO) will more than likely be necessary.

For those unfamiliar with a QDRO, it grants a former spouse the right to receive either a set number of payments from a certain retirement account or a set percentage of the balance of a certain retirement account. It is typically included in the language of final divorce papers and must include the following information:

  • The retirement plans that are to be divided
  • The names and current mailing addresses of the plan participant and the former spouse
  • The amounts/percentages to be paid out
  • The QDRO timeframe

Typically, the spouse entitled to the set number of payments or a percentage of the balance rolls it over into an individual retirement account (IRA) tax-free.

It is worth noting that the lack of a proper QDRO can create major tax consequences for the recipient spouse. Consequently, divorcing spouses should strongly consider consulting with a legal or financial professional to learn more about how a QDRO works and the steps that need to be taken.

This post is for informational purposes only and is not to be construed as legal or financial advice.

Stay tuned for more from our Ft. Worth family law blog …


Reuters, “What is a QDRO? How divorce affects retirement,” Andrew Chow, April 19, 2012