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Getting divorced can be an extremely difficult and emotional process. One of the most challenging parts of finalizing a divorce is determining how to divide up assets like retirement accounts. Many married couples have one or more retirement accounts like 401k, and figuring out who gets what portion can quickly become complicated.

In Minnesota, the length of your marriage is a key factor determining how retirement accounts like 401k get divided up in a divorce. So, how long do you generally need to be married to be entitled to half of your spouse’s 401k?

Here’s what you need to know about dividing up 401ks and other retirement assets in a Minnesota divorce.

What Happens When a 401k is Divided in Divorce?

The 401k will be divided by assigning percentages to each spouse based on factors like length of marriage and each spouse’s contributions. These percentages are spelled out in a qualified domestic relations order (QDRO) prepared by family law attorneys and approved by the retirement plan administrator.

Minnesota is an equitable distribution state, so retirement funds are split fairly and equitably based on factors like length of marriage, contributions made by each spouse, and total assets. The split does not have to be an even 50-50 division.

Can I Lose My 401k to My Spouse in a Divorce?

You cannot lose your entire 401k in a divorce, but your spouse may be awarded a percentage of the retirement savings you accumulated during the marriage. The exact percentage will depend on various factors and may range from 10% to 50% or more.

How Retirement Assets Get Divided in Minnesota Divorces

Minnesota is an “equitable distribution” state when dividing up marital assets like houses, cars, businesses, and retirement accounts. This means retirement accounts get divided equitably or fairly between spouses.

It does not necessarily mean an even 50/50 split. Rather, courts will look at the totality of the circumstances to determine a fair and reasonable division of all marital property.

Some factors looked at when equitably dividing up retirement assets include:

  • Length of the marriage
  • Contributions made by each spouse to the account during the marriage
  • Value of the retirement account
  • Other assets owned by each spouse
  • Income and earning potential of each spouse

The longer you are married, the more likely you will get an equal, 50/50 split of retirement accounts like a 401k. But there is no magic minimum number of years you need to be married to get half automatically. Even if married only 5 years, you may still get half sometimes.

Tracing Contributions Made Before and During the Marriage

A major consideration is determining contributions made by each spouse to a retirement account before the marriage compared to during the marriage.

For example, if your spouse has been contributing to a 401k for 20 years, but you were only married for the last 5 of those years, you would likely only get a share of the contributions made in those last 5 years of marriage.

The portion of the 401k earned during the marriage is generally considered marital property up for division. The portion earned before marriage remains your spouse’s separate, non-marital property.

So even if married for 20 years, if your spouse earned most of the 401k before marriage, you may get less than half. The longer you are married, the more marital contributions mix with non-marital ones already in the 401k.

Using a QDRO to Divide Retirement Accounts

The actual division of most retirement accounts like 401ks and pensions needs to be done through a qualified domestic relations order, or QDRO. This is a special court order that tells the retirement plan administrator to distribute a portion of the account to the non-account-holding ex-spouse.

Divorcing couples need to have their divorce attorneys draft up a QDRO spelling out exactly how the retirement account is to be divided and distributed. This order must be approved by plan administrators to split the retirement asset while maintaining tax advantages successfully.

Can a Spouse Withdraw Money From 401k Before Divorce?

Spouses should be very careful about withdrawing funds from retirement accounts like 401ks once divorce paperwork has been filed. Large withdrawals can be seen as one spouse taking more than their fair share of assets. Talk to an attorney before making 401k withdrawals before finalizing the divorce.

Also, once divorce papers are filed, it is usually prohibited for a spouse to take out 401k loans or otherwise put the asset at risk. Doing so without consent from the other spouse can be seen as endangering marital property up for division. Consult an attorney before making 401k withdrawals before the divorce is finalized.

How Martine Law Divorce Lawyer Can Help With Dividing Retirement Accounts

Dividing up assets like houses, businesses, and retirement accounts during a divorce can quickly get complicated. It is important to have a Minnesota divorce attorney on your side to help you understand your options and rights regarding retirement asset division.

Our attorneys can also review your retirement planning and offer legal advice concerning the tax implications, withdrawal penalties, and other financial impacts of dividing retirement savings. We help take the guesswork out of the retirement asset division during the often challenging divorce process.

To set up an initial consultation with a Martine Law divorce attorney regarding the division of 401k or other retirement accounts in your Minnesota divorce, contact us online today. Our team is here to help you get the fair and equitable division of assets you deserve.