Dividing Retirement Assets in a High-Asset Divorce

The Importance of Properly Dividing Retirement Assets in Divorce

Divorce is a life-altering event that can significantly impact your financial future—especially when it involves substantial retirement savings. Retirement accounts, pensions, and long-term investment plans often represent some of the most valuable assets in a marriage, particularly in high-asset divorce cases. Yet, many individuals overlook the legal complexity and long-term financial consequences of dividing these accounts improperly.

At Angiuli & Gentile, LLP, we understand that your retirement is not just a financial asset—it’s your future. Whether you are the primary income earner or the non-working spouse, we ensure that retirement accounts are equitably and legally divided, while minimizing tax penalties, avoiding costly mistakes, and protecting your ability to retire with security.

Our firm has extensive experience handling the division of complex retirement portfolios during divorce, and we partner with financial planners, CPAs, and actuaries to ensure every aspect is thoroughly addressed.

Retirement Accounts as Marital Property

Determining What Is Subject to Division Under New York Law

In New York, divorce law follows the principle of equitable distribution, which means that marital property is divided fairly—but not necessarily equally. Any assets acquired by either spouse during the course of the marriage are generally considered marital property, regardless of whose name is on the account or who made the contributions. This includes most retirement savings, such as:

1. Employer-sponsored 401(k) plans
2. Individual Retirement Accounts (IRAs)
3. Public and private pension plans
4. Deferred compensation
5. Profit-sharing plans

The classification of these accounts is crucial. Contributions made before the marriage are often considered separate property, while contributions made during the marriage are subject to division. However, even separate property can be commingled with marital property or appreciate in value during the marriage—making the line between separate and marital murky.

Our attorneys meticulously analyze:

1. Contribution timelines
2. Employer matching contributions
3. Rollovers and account statements
4. Beneficiary designations and plan documents

This in-depth analysis allows us to advocate for an accurate and fair division that reflects the realities of your financial situation.

The Critical Role of QDROs (Qualified Domestic Relations Orders)

What They Are, Why You Need One, and How We Handle the Process

A Qualified Domestic Relations Order (QDRO) is a legal document required to divide most employer-sponsored retirement accounts, such as 401(k)s, 403(b)s, and defined benefit pension plans. Without a QDRO, the plan administrator cannot legally transfer funds from one spouse to another—even if the divorce settlement requires it.

Improper or incomplete handling of QDROs can lead to:

• Significant tax penalties
• Delayed or denied distribution of funds
• Loss of legal rights to retirement benefits

At Angiuli & Gentile, LLP, we don’t leave anything to chance. We oversee the entire QDRO process, including:

1. Identifying which retirement accounts require a QDRO
2. Collaborating with financial experts to ensure accuracy of division
3. Drafting QDROs that comply with both federal law and specific plan guidelines
4. Securing court approval and filing the order with the plan administrator
5. Following up to confirm proper implementation of the QDRO by the plan

Each retirement plan has its own set of rules, and generic templates often don’t meet the necessary requirements. Our firm tailors every QDRO to fit the unique details of your case, ensuring that your share is secure—and legally enforceable.

Types of Retirement Accounts Commonly Divided in Divorce

Tailored Strategies for Each Retirement Asset Class

Every retirement plan is different. Each carries its own set of rules, distribution options, and legal requirements for division. We understand the nuances and offer strategic solutions for all types of retirement accounts, including:

Employer-Sponsored Defined Contribution Plans (401(k), 403(b), TSP)

These plans are funded through employee contributions and are typically divided using a QDRO. We help ensure the division is structured to:

• Avoid early withdrawal penalties
• Minimize tax liabilities
• Reflect accurate valuations, including investment growth and market fluctuations

Defined Benefit Plans (Traditional Pensions)

Pensions are not accounts with cash balances, but promises of future payments. Dividing them requires either:

• A “shared payment” approach, where the non-employee spouse receives a portion of the pension when it’s paid out
• A present value offset, where the value of the pension is calculated and exchanged for other assets

We work with actuaries and pension valuation experts to secure the best method for your needs.

Individual Retirement Accounts (IRAs and Roth IRAs)

While IRAs don’t require QDROs, dividing them improperly can result in taxation and penalties. We ensure:

• Divorce decree language is clear and compliant
• Trustee-to-trustee transfers are handled correctly
• Spouses receive their share without triggering a taxable event

Federal and Military Retirement Plans

Federal and military retirement systems—such as FERS, CSRS, and military pensions—have strict rules for division. In addition to QDRO-equivalent orders, these systems require precise language and administrative compliance.

We handle:

• Military Retirement Division under the Uniformed Services Former Spouses’ Protection Act (USFSPA)
• Federal pensions, including Thrift Savings Plans (TSP)
• Survivor benefits and cost-of-living adjustments
  

Tax Implications of Retirement Asset Division

Avoiding Penalties and Structuring a Tax-Efficient Divorce

Dividing retirement accounts is not just a legal issue—it’s also a tax issue. Improper division can result in:

• A 10% early withdrawal penalty
• Immediate income tax liability
• Long-term impact on retirement income

Our firm takes a proactive approach to tax planning during divorce. We collaborate with CPAs and financial planners to help you:

• Structure QDROs and IRA transfers for penalty-free and tax-deferred division
• Determine the most advantageous timing and form of distributions
• Factor in required minimum distributions (RMDs) if you’re nearing retirement age
• Avoid hidden tax traps in divorce settlement language

We also advise on the after-tax value of assets so you can make apples-to-apples comparisons during property division.

Protecting Your Financial Future

Strategies for Both Earning and Non-Earning Spouses

Retirement assets are your safety net. Divorce shouldn’t unravel your financial future.

For high-income earners, we ensure that:

• Only marital portions of retirement accounts are subject to division
• Separate property is clearly defined and protected
• Complex portfolios are managed fairly and efficiently

For non-working or lower-earning spouses, we ensure that:

• You receive your fair share of retirement savings earned during the marriage
• QDROs and account transfers are properly executed
• You are positioned for financial independence post-divorce

We also offer support for:

• Retirement planning after divorce
• Modifications to beneficiary designations
• Enforcement of retirement asset provisions in existing divorce orders

Our goal is to secure your future—not just your present.

How Angiuli & Gentile, LLP Can Help

At Angiuli & Gentile, LLP, we don’t just divide assets—we help protect futures. Our legal team is highly experienced in managing the complexities of retirement asset division in high-asset divorce cases. We bring together legal insight, financial strategy, and long-term vision to guide you through every step.

Here’s what you can expect when you work with us:

Detailed Analysis of Retirement Portfolios

We identify all retirement accounts, classify them as marital or separate, and evaluate their current and projected values.

Precise QDRO Drafting and Filing

Our attorneys prepare QDROs that meet the plan’s exact requirements, obtain court approval, and file them to ensure timely processing.

Coordination with Financial Experts

We collaborate with trusted CPAs, financial advisors, and pension evaluators to ensure no asset is overlooked or misvalued.

Personalized Legal Strategy

Every case is different. We tailor our approach to meet your goals—whether you’re preserving wealth or securing a fair financial outcome.

Ongoing Legal Support

We continue to support our clients after divorce, assisting with QDRO enforcement, retirement plan follow-through, and beneficiary updates.

You’ve worked hard for your retirement. Let us help protect it.

Frequently Asked Questions

Do I need a QDRO for all retirement accounts?

No. Only certain plans—such as 401(k)s, pensions, and other qualified employer-sponsored plans—require QDROs. IRAs, Roth IRAs, and non-qualified deferred compensation plans are divided differently but still require careful handling to avoid tax consequences.

Can my spouse take half of my retirement?

Only the marital portion of your retirement savings is subject to division. This typically includes any contributions and investment growth accrued during the marriage. Contributions made before the marriage, or from inheritance, may be considered separate property.

What happens if I don’t use a QDRO?

Without a QDRO, the plan administrator cannot legally divide the retirement plan—even if your divorce agreement says it should be split. This could lead to one spouse being denied their share, or the other facing taxes and penalties for unauthorized distributions.

Will I be taxed when receiving retirement assets in a divorce?

If done properly (such as through a QDRO or direct transfer), no taxes are due at the time of transfer. However, taxes may be owed later when the recipient withdraws funds in retirement. Our firm structures transfers to preserve tax-deferred status.

What about federal or military pensions?

Federal and military pensions follow their own division rules and require specific legal documentation. We are well-versed in these systems and can prepare the proper orders and work with the appropriate agencies to secure your benefits.

Contact Angiuli & Gentile, LLP Today

Dividing retirement assets during divorce requires specialized knowledge, technical precision, and a commitment to your long-term security. At Angiuli & Gentile, LLP, we provide the strategic legal guidance you need to navigate this process with clarity and confidence.

Whether you’re preparing for divorce or facing retirement-related asset division as part of your case, contact our firm today to speak with an experienced family law attorney.