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Property Division of 401(K)s and Other Retirement Accounts in a Divorce

Property Division

You’ve always been told to put a little something away for a rainy day. And now it’s pouring.

Despite your best efforts, you could not save your marriage, and now life as you know it—your finances, your family, your future—hangs in the balance.

Trust us when we say you’re not the first person to find themselves here. You’re probably worried sick about how you’ll afford all this, and although you know that some of your assets may be up for grabs, you’re particularly concerned about your 401k or other retirement accounts.

Could your soon-to-be ex-spouse get their hands on your (literal) life’s savings?

Let’s dive into what the law says about dividing retirement accounts and how you can get help with your divorce.


South Carolina is an Equitable Distribution State

When getting a divorce, South Carolina courts will divide property equitably

In South Carolina, property acquired during a marriage is considered marital property. Family law judges attempt to split marital property according to what would be most fair between spouses. 

But first, they must determine whether the assets in question are actually considered marital property. For retirement accounts specifically, they’ll consider the date of account opening and contributions. 

For instance, if the 401k or retirement account was opened during the marriage, it most likely would be considered marital assets, meaning your spouse will be entitled to a portion of it. The same is true for a retirement plan that was established pre-marriage but contributed to during the marriage. 

Those contributions would be considered marital assets—therefore, subject to equitable distribution laws.


Does Equitable Mean Equal?

The short answer is no—equitable does not always mean equal. 

The court must consider many factors when determining what is fair and equitable for both spouses. And this does not necessarily mean that each spouse gets exactly half of the marital estate.

The court has discretion when it comes to dividing retirement plans such as 401ks and individual retirement accounts and may consider factors like:

  • The duration of the marriage
  • Each spouse’s earning capacity and education level
  • Prenuptial or postnuptial agreements made by you and your former spouse
  • Marital fault (abuse, adultery, etc.)

But you do have a say in the matter. 

Your divorce lawyer can help you value your retirement accounts, provide evidence on your behalf and propose a fair split that leaves all or most of your assets intact.


How Are Retirement Accounts Divided?

Once the divorce settlement is decided, dividing retirement accounts like IRAs should be as simple as filling out forms from your current account manager. 

However, if your account is a 401k or a pension, you must complete a Qualified Domestic Relations Order (QDRO). 

This document will be a part of your final divorce agreement and splits your retirement account based on a dollar amount or percentage or transfers the entire asset to the receiving spouse.


Keep What’s Yours Intact — Contact Steele Family Law

Your retirement assets are a nest egg for your future self. Losing all or a good portion of these funds could put you back at square one when it comes to planning for your retirement.

Can you afford that? 

We know how difficult divorce is. You’re fighting, emotions are running high, your bank balance is running low, and you’re ready to give up and give in so that you can put this all behind you as soon as possible.

Know that you have allies with Steele Family Law. We can represent you in your divorce, allowing you to focus on your mental health while we protect your hard-earned assets. Schedule a meeting with a family lawyer today.

Author Bio

Greg Steele is CEO and Managing Partner of Steele Family Law, a South Carolina estate planning and family law firm. With years of experience in practicing law, he has zealously represented clients in a wide range of legal matters, including divorce, child custody and support, estate planning, probate, and other legal cases.

Greg received his Juris Doctor from the University of Georgia and is a member of the South Carolina Bar Association. He has received numerous accolades for his work, including being named among Anderson’s Top 20 Under 40 in 2022.

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