What Happens to IRAs, 401Ks and Retirement Plans in a Divorce

What happens to your IRAs, 401Ks and other Retirement Plans in a divorce? In New York, if a spouse has an IRA, 401K or other retirement plan then any contributions to those plans during the marriage are considered marital property and the other spouse is entitled to their marital share.

If the IRA, 401K or other retirement plan existed prior to the marriage, then any contributions and earnings from those contributions before the marriage date are considered separate property. However, in order to exclude the separate property portion of the IRA, 401K etc. from the marital property portion, you need to have documentation of what was the balance in the IRA, 401K prior to the marriage.

Here are some examples:

Example A: Neither spouse had an IRA, 401K etc. prior to marriage and only one spouse contributed to either an IRA or 401K during the marriage. This is the easiest situation and usually the most common one. Here, whatever monies was placed in the IRA/401K is considered marital property and the other spouse is entitled to 50% of the funds in the account as of the date the divorce started.

Example B: Neither spouse had an IRA, 401K etc. prior to marriage and both spouses contributed to either an IRA or 401K during the marriage. Similar to the above situation, whatever monies was placed in the IRA/401K is considered marital property and each spouse is entitled to 50% of the funds in the other spouse’s account as of the date the divorce started.

Example C: One spouse had an IRA, 401K etc. prior to marriage and that same spouse contributed to either an IRA or 401K during the marriage. This is a common occurrence. As stated above, whatever monies that the spouse in their IRA/401K prior to the marriage is 100% theirs. The issue is having a document or evidence showing what was in the account. Without the documentation or evidence, then the entire IRA/401K account can be considered marital property. In some situations, an estimate of how much was in the IRA/401K account prior to the marriage can be used to shield that from the marital property portion. Once the determination is made of how much in the funds is considered marital property, then the other spouse is entitled to 50% of the funds in the other spouse’s account as of the date the divorce started.

Example D: One spouse had an IRA, 401K etc. prior to marriage and both spouses contributed to either an IRA or 401K during the marriage. As stated above, whatever monies that the spouse in their IRA/401K prior to the marriage is 100% theirs. The issue is having a document or evidence showing what was in the account. Without the documentation or evidence, then the entire IRA/401K account can be considered marital property. Once again, there has to be a determination of what is considered marital property and what is separate property.

The Badanes Law Office and David Badanes can answer your questions concerning retirement assets or retirement benefits in a divorce.

If you need an attorney for your divorce or to help you in obtaining your retirement assets or retirement benefits, please call David Badanes and the Badanes Law Office at 631-239-1702, email at david@dbnylaw.com or visit our web site: www.dbnylaw.com. The Badanes Law Office represents clients in Suffolk County, Nassau County, and New York City. Our offices are located in Northport and in Garden City. We can also meet clients at offices located in Brooklyn and Manhattan.

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