Photo by Emre ÇOBAN on Unsplash

There are many different aspects to any divorce case.  One thing that is common to pretty much every case is the division of property and/or debt.  This includes everything from personal property (the pots and pans) to real estate, bank accounts and retirement accounts.  This blog is written to generally address how the family court in Michigan will handle the division of divorcing spouses' 401(k) accounts.  Each case is different, if you have questions regarding a potential divorce or separation, you should schedule a consultation to discuss the matter.

What Happens To My Spouse's 401(k) In A Divorce In Michigan?

All marital property in Michigan is subject to an equitable division.  This means that if property is deemed "marital" then it will be divided roughly equally between the parties.  This is true regardless if the property is held or titled in the name of one spouse and/or who "earned". acquired or accumulated the property.  Marital property is basically any property that is acquired or obtained by either spouse's efforts or labor during the marriage.  When it comes to retirement accounts, like a 401(k) account, if they were contributed to during the marriage, then most likely the account will be divided between the parties regardless of whose name is listed on the account.  This is accomplished at the end of the divorce using a Qualified Domestic Relation Order (QDRO) so there is no tax effect as long the funds are "rolled-over" from the participant spouse's 401(k) to another 401(k) account in the name of the alternate spouse

If the 401(k) was contributed to only during the marriage and all of the accumulation of the value happened during the marriage, then the entire account will be divided roughly equally between the spouses.  If the 401(k) was contributed to before the marriage by the spouse that is the participant in the 401(k) plan but then the participant spouse continues to contribute to the 401(k) then the marital portion will be divided equally between the spouses.  That is to say the participant spouse will be entitled to 100% of the premarital balance of the account (the total value as of the date of the marriage) but the difference between the value of the account at the date of the divorce and the date of the marriage will be divided equally.  Finally, if the 401(k) was only contributed to before the marriage but no contributions were made after the date of the marriage, then most likely the participant spouse will be entitled to 100% of the account without any offset of other property. 

There are so many moving parts to a divorce case that must be carefully considered by each spouse including the division of retirement accounts.  If you are facing a potential divorce or separation, please do not hesitate to contact us by clicking on this link or calling us at (248) 608-4123 to schedule a consultation.