Do I Have to Split My Retirement Accounts In Divorce?

Dividing property in a divorce is rarely easy, but when it comes to retirement accounts, things can get especially confusing. Many people wonder: “Do I really have to split my 401(k), pension, or IRA with my spouse?” In Colorado, the answer is usually yes, at least to some extent. That’s because Colorado is what’s known as an equitable distribution state.

Let’s take a closer look at what that means and how it might apply to your situation.

What Is Equitable Distribution?

In Colorado, we don’t automatically divide everything 50/50 in a divorce. Instead, courts aim for what’s considered fair—and that’s not always an equal split. This concept is called equitable distribution, and it applies to most types of property acquired during the marriage, including retirement accounts.

So, if you or your spouse contributed to a retirement account during the marriage, chances are that portion will be treated as marital property—regardless of whose name is on the account or who earned the money.

Are All Retirement Accounts Split the Same Way?

Not quite. Different types of retirement accounts are handled a little differently in a divorce, but the core idea stays the same: the portion earned during the marriage is usually split.

401(k)s, 403(b)s, and Pensions

If contributions were made during the marriage, that part of the account is usually divided. Any funds contributed before the marriage are generally considered separate property and aren’t subject to division—but they may need to be carefully traced.

IRAs (Individual Retirement Accounts)

Traditional and Roth IRAs are also subject to division. However, they don’t require a special court order like 401(k)s do (more on that below).

Government and Public Pensions (like PERA)

If you or your spouse is a public employee with a pension, the same general rule applies: the portion earned during the marriage is marital and may be divided in the divorce.

How Are Retirement Accounts Actually Divided?

The first step is figuring out what portion of the account is marital property. That means looking at when contributions were made, how much was added during the marriage, and how much the account has grown.

Once the marital portion is calculated, there are a few different ways to split it:

Using a QDRO (Qualified Domestic Relations Order)

For employer-sponsored plans like 401(k)s or pensions, a QDRO is needed. This legal document tells the retirement plan administrator how much to transfer to the non-account-holding spouse. Without a QDRO, those funds usually can’t be legally split.

A QDRO can also help avoid early withdrawal penalties and ensures that taxes are handled properly.

Dividing an IRA

With IRAs, a QDRO isn’t necessary. The division is usually handled through language in the divorce decree, and the receiving spouse can transfer their share into their own IRA to avoid taxes and penalties.

Can I Keep My Retirement Accounts Without Splitting Them?

Sometimes. In some divorces, spouses agree to offset the value of a retirement account with other marital property—like home equity, vehicles, or cash. For example, if one spouse keeps the retirement savings, the other might receive a larger share of the house or bank accounts.

These arrangements need to be carefully negotiated and clearly spelled out in the divorce agreement. Working with an attorney is essential to make sure everything is legally sound and financially fair.

Why Legal Help Matters

Dividing retirement accounts isn’t always straightforward. Mistakes can be costly—both in the short term and years down the road. Having a skilled divorce attorney on your side can help you:

• Properly determine what’s marital vs. separate property

• Draft and file necessary legal documents like QDROs

• Protect your financial future and avoid tax pitfalls

• Negotiate fair and creative settlements that work for both parties

Every case is different, and every couple’s finances are unique. That’s why it’s important to work with someone who understands both the law and the practical side of divorce.