Retirement savings built during the marriage are usually marital property. Splitting a 401(k) or pension correctly requires a special court order called a QDRO.

Retirement accounts are often a couple's largest asset after the house, and the portion built during the marriage is generally marital and divisible. You can't just move money out of a 401(k) or pension the way you'd split a checking account. Dividing an employer plan requires a Qualified Domestic Relations Order (QDRO), a separate order, on top of your decree, that tells the plan administrator exactly how to split the account. IRAs are divided through a different "transfer incident to divorce" mechanism.

When done right, these transfers happen without taxes or early-withdrawal penalties. When done wrong or skipped and someone can get hit with a tax bill or lose their share entirely. Pay attention to the account type: a Roth dollar (already taxed) is worth more than a pre-tax traditional dollar of the same balance, so "equal" balances aren't always equal value. These are expensive fixes, which is why couples should make sure the QDRO is actually drafted and filed, not just promised in the agreement.

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Colorado

Colorado, USA