Retirement 401K Division in Divorce via QDRO

Division of Retirement Assets (QDRO) in Divorce Cases in SC

By M. J. Goodwin


In this day and age, it’s hard to save money. Most people going through a divorce have worked hard and put away some retirement savings in their 401K or similar retirement accounts at work. Some times one party has put a lot of money in his or her account while the other spouse’s money was used to pay day to day bills. So one party has very little saved and the other has realized that these small savings add up over time and can become a major asset. Many times, the 401K money is worth more than the marital home. In such cases, it is important to remember that the money put away during the marriage is a marital asset. So are the earnings on those investments. The name on the account doesn’t matter. It is a marital asset. So how it is divided?

Absent an agreement of the parties, the Court will apply the guidelines for equitable distribution of property to all marital assets.

South Carolina Law provides as follows:

SECTION 20-3-610. Spousal equity and ownership rights.

During the marriage a spouse shall acquire, based upon the factors set out in Section 20-3-620, a vested special equity and ownership right in the marital property as defined in Section 20-3-630, which equity and ownership right are subject to apportionment between the spouses by the family courts of this State at the time marital litigation is filed or commenced as provided in Section 20-3-620.

SECTION 20-3-620. Apportionment factors.

(A) In a proceeding for divorce a vinculo matrimonii or separate support and maintenance, or in a proceeding for disposition of property following a prior decree of dissolution of a marriage by a court which lacked personal jurisdiction over an absent spouse or which lacked jurisdiction to dispose of the property, and in other marital litigation between the parties, the court shall make a final equitable apportionment between the parties of the parties’ marital property upon request by either party in the pleadings.

(B) In making apportionment, the court must give weight in such proportion as it finds appropriate to all of the following factors:

(1) the duration of the marriage together with the ages of the parties at the time of the marriage and at the time of the divorce or separate maintenance or other marital action between the parties;

(2) marital misconduct or fault of either or both parties, whether or not used as a basis for a divorce as such, if the misconduct affects or has affected the economic circumstances of the parties, or contributed to the breakup of the marriage; provided, that no evidence of personal conduct which would otherwise be relevant and material for purposes of this subsection shall be considered with regard to this subsection if such conduct shall have taken place subsequent to the happening of the earliest of:

(a) entry of a pendente lite order in a divorce or separate maintenance action;

(b) formal signing of a written property or marital settlement agreement; or


(c) entry of a permanent order of separate maintenance and support or of a permanent order approving a property or marital settlement agreement between the parties;

(3) the value of the marital property, whether the property be within or without the State. The contribution of each spouse to the acquisition, preservation, depreciation, or appreciation in value of the marital property, including the contribution of the spouse as homemaker; provided, that the court shall consider the quality of the contribution as well as its factual existence;

(4) the income of each spouse, the earning potential of each spouse, and the opportunity for future acquisition of capital assets;

(5) the health, both physical and emotional, of each spouse;

(6) the need of each spouse or either spouse for additional training or education in order to achieve that spouses’s income potential;

(7) the nonmarital property of each spouse;

(8) the existence or nonexistence of vested retirement benefits for each or either spouse;

(9) whether separate maintenance or alimony has been awarded;

(10) the desirability of awarding the family home as part of equitable distribution or the right to live therein for reasonable periods to the spouse having custody of any children;

(11) the tax consequences to each or either party as a result of any particular form of equitable apportionment;

(12) the existence and extent of any support obligations, from a prior marriage or for any other reason or reasons, of either party;

(13) liens and any other encumbrances upon the marital property, which themselves must be equitably divided, or upon the separate property of either of the parties, and any other existing debts incurred by the parties or either of them during the course of the marriage;

(14) child custody arrangements and obligations at the time of the entry of the order; and

(15) such other relevant factors as the trial court shall expressly enumerate in its order.

(C) The court’s order as it affects distribution of marital property shall be a final order not subject to modification except by appeal or remand following proper appeal.


Once a percentage division is determined by the Court, retirement and 401K accounts are divided by having a Qualified Domestic Relations Order, or QDRO, drafted. This is a legal instrument recognized by the Internal Revenue Service. It allows a portion of the 401K or retirement account to be “rolled” into the name of the soon to be former spouse without any tax consequences. Once the new “alternate payee” account is established, the rules of the particular plan apply as to when the money available.   I remind clients that retirement money is meant for retirement and not to cash this investment in prematurely if at all possible.

In any case involving significant assets, an experienced divorce lawyer is a good investment. A divorce attorney can help you navigate the complex situation of equitable distribution and QDROs in an efficient way, and maximize your assets.  If keeping the retirement account is terribly important to a litigant, equitable division can often be accomplished by giving the spouse other assets of the marriage, such as the marital home, other real estate such as retirement homes or other high value assets.  It is difficult to deal with complex issues like a QDRO without an attorney.

M.J. Goodwin, a divorce lawyer with 23 years experience in Anderson, South Carolina and surrounding areas, can be contacted at: or by calling 864-375-0909. Email inquiries are typically returned within 12 hours.





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