Marital dissolution will almost always require division (or some other solution) for retirement assets. Furthermore, if the plan (such as a 401k) falls under a particular federal law (‘ERISA’), you will likely need a special, extra order called a “qualified domestic relations order” (‘QDRO’). The QDRO will allow funds to be transferred without either individual incurring financial penalties. Not all plans require this level of attention, but many do.
It is also possible that money in a retirement account remains where it is until months or years after the divorce becomes final. It is important to note that a retirement account may not be split evenly, and the exact split will determine on several factors, especially if the parties negotiate a different way to divide their property and debt so the retirement plans can be left alone.
Ideally, the terms of a divorce will be determined by a couple outside of court. This can give both spouses more control over the final outcome. (It is never fun to have a judge tell you what will happen with your property!) If a couple has a prenuptial agreement, and it is valid, its terms may also significantly change the landscape for how assets and debts are split.
The end of a marriage may cause emotional and financial turmoil in a person’s life. However, it may be possible to limit the financial damage a divorce causes by working with an attorney to negotiate a fair settlement.