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What Happens to Your Retirement Money During a Divorce?

Jan 15, 2022 | Divorce, Property Division

Splitting up the assets is one of the most challenging aspects of a Texas divorce. Since our state operates under the community property law, anything earned during a marriage will need to be divided up between the spouses during a 401k divorce. When it comes to retirement accounts, this can be a challenging process, and it’s often more sensible to negotiate and find alternatives to splitting everything 50-50.

Aside from your 401k, you might also have an Individual Retirement Account (IRA), deferred compensation accounts, pensions, and other retirement saving plans. The more accounts you have, the more complex your divorce becomes, since you have to figure out how much your spouse is entitled to for each. In most cases, hiring a highly competent family law attorney is the best way to find a solution that is fair to all parties.

How Are Retirement Assets Split Up During a Texas Divorce?

Like other assets, your retirement accounts will most likely be split up equally between the spouses, no matter who earned the money or whose name is on the paperwork. However, this does not apply to money you brought into the marriage. What’s more, there might be different rules when it comes to social security or military benefits. The length of the marriage will be considered, so the non-earning spouse gets more if you have been married for many years.

No matter your individual situation, the laws surrounding 401k divorce in Texas are complicated, and you might benefit from professional help. A lawyer can explain the concepts more clearly and help you figure out how they apply to you. Then, you can work towards a resolution that allows you and your spouse to secure your retirement, so neither of you has to worry about future financial hardship.

Contributions Before Marriage

Some people start their marriage without many assets, while others bring significant sums into the union. If you or your spouse had already begun to contribute to your retirement accounts before getting married, this money won’t be split up. It is considered separate property and will remain in the possession of the spouse who made the contribution.

Contributions During Marriage

A retirement account that was started after you were already married is considered community property, which means that both parties have a right to 50% of it. This is true regardless of who contributed to it. Even if the account is exclusively in your name, you will still need to share it with your former spouse.

Accounts that were opened after your wedding are easy to split up, but those you contributed to both before and after you were married can be a challenge. Some of the money might belong to you exclusively, but some will have to be divided equally. In such complicated situations, professional help is crucial and can help you to prevent costly mistakes.

Social Security or Military Benefits

Aside from the aforementioned retirement accounts, there are some other benefits to consider. You might have heard of Social Security Spousal Benefits, which entitle you to some Social Security money if you split up with your spouse. You are only eligible for this if you have been married for at least 10 years and fulfill some other requirements. A good attorney will be able to analyze your situation and see whether this is an option for you.

Similarly, spouses of military service members may retain some of their pension benefits even after a Texas divorce. The length of the marriage will be considered as well as the length of the employee’s service. If you are eligible, you will receive your payments directly from the service member’s retired pay.

How to Keep Your Assets Safe During Your 401k Divorce

Now you know the basic rules, you might wonder how to keep your assets safe and prevent losing access to important retirement benefits. While the community property rule is the default, a judge may decide on a different split, depending on your circumstances. They will take your individual situation into consideration before deciding how to divide up your assets.

For this reason, you should investigate all options and find out how you can get the best outcome possible. Let’s have a closer look at how you can prevent your spouse from cashing out early, how you can make sure all assets are declared, and what negotiation strategies you may want to employ to make the process easier.

Is Cashing Out Early Allowed?

There are regulations related to cashing out which can prevent you or your spouse from removing money from retirement accounts while the divorce is ongoing. In general, it is not a good idea to try to take money out, even if it’s tempting, because it could be viewed in a negative light in court.

When you get in touch with us, we will examine your county’s rules and find out whether there are “standing orders” that prevent such behavior. If you don’t live in a county that has a law in place, you can file for a Temporary Restraining Order that prevents your spouse from removing money. This way, there won’t be any negative surprises, and you can be sure that none of the money is missing.

Finding all Assets

Before you file for divorce, you should compile as much financial information about yourself and your spouse as possible. Gather evidence of property ownership and financial statements, which you can bring to your initial consultation with your lawyer. If you’re worried that your spouse is hiding accounts, you should mention this, and your attorney can tell you how to proceed.

Fortunately, it’s not easy to hide retirement accounts. In most cases, there will be a record of them on the earnings statement or pay stub, so this is the first place you should look. 401k and retirement accounts typically also send out statements periodically, often at the end of the year. If you can gain access to these documents, you’ll get a better idea of your spouse’s current situation.


Although retirement accounts built up during the marriage are usually split 50-50, you can negotiate a different outcome with your spouse. For example, if you would like to keep your entire balance, you can offer something else that has a similar value. This might be a car or even a property, depending on the size of your retirement pot. Often, dividing up assets this way is easier than splitting every account in half.

Keep Your Retirement Secure

If you are going through a Texas divorce, you will need to split up all your assets, including the ones meant to support you during your retirement. Because you might have a multitude of accounts such as a 401k, IRA, and deferred compensation account, this process can be challenging. Spouses of people who were in the military may also be entitled to some retirement benefits, but it depends on the length of the marriage.

The most straightforward way of navigating this challenging situation is to hire a lawyer, who can work with you to come up with a fair outcome. They can advise you on how to find all accounts and prevent your spouse from cashing out early. What’s more, they will discuss ways you could negotiate and find alternative solutions. Call us now at Skillern Law to book an appointment with one of our top lawyers and find out more.