How are Retirement Accounts Divided in Divorce?

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How are Retirement Accounts Divided in Divorce?

December 18 2022
By Virginia Family Law Center

You may know that in divorce in Virginia, assets need to be divided. These assets include not only cash and physical property, but also financial accounts that you may not even think about often, like retirement accounts. 

This means you will need to split a retirement account, whether it is a pension, 401(k), simple 401(k), traditional IRA, Roth IRA, or SEP IRA. However, splitting these accounts is not as simple as taking half of the money and giving it to your ex-spouse. There are specific procedures involved as well as state laws that apply.

Are Retirement Accounts Separate or Marital Property?

Under Code of Virginia § 20-107.3, retirement accounts and pensions are presumed to be marital property unless there is sufficient evidence that the account is separate property. Separate property means that the money in the retirement account was accumulated before the date of the marriage.

Whatever is acquired by either spouse during the marriage is considered to be jointly owned and is, therefore, marital property. Even if the retirement account is not titled in both spouses’ names, it is still considered marital property, so that’s something you will need to keep in mind in a divorce. 

Marital property is subject to equitable distribution in a Virginia divorce. This means that retirement accounts are not necessarily split 50/50. They may be split 60/40, 70/30, or some other percentage. It’s up to the court to decide.

How are the Accounts Divided?

Once the percentage is determined, you now need to divide the accounts in the proper manner. Splitting an IRA is fairly easy. You would take the percentage of the money owed to your ex-spouse and put it in their IRA. If they do not have one, getting one is quick and easy. 

For a 401(k) or other qualified plans, however, you will need to use a legal document called a Qualified Domestic Relations Order (QDRO). In order for a QDRO to be valid, it must include the following:

  • Name and mailing address of the plan participant and payee
  • Name of each plan to which the order applies
  • Exact percentage of the benefit to be paid
  • The time period or number of payments in which the order applies

Keep in mind that QDROs do not only apply to ex-spouses. Children and other dependents may be beneficiaries as well.

Contact Us Today

Splitting assets in a divorce can be tricky, especially if retirement accounts are involved. People do not always think about these assets, but they still need to be involved in the divorce process nonetheless, and splitting them up can get complicated quickly. 

The Virginia Family Law Center can assist you with the most complex property division issues. Our Virginia divorce lawyers have more than 30 years of experience, so we will make sure your property division is done right. Schedule a consultation by calling (703) 865-5839 or filling out the online form.

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