How Do You Divide a Retirement Account in Divorce?

By Jones & Associates Law P.C.

Many Pennsylvania employers offer retirement accounts to their employees, and many employees are counting on these accounts to sustain them once they have retired. So are their spouses.

For many married couples, a retirement account may be one of the single largest assets they own, but unlike a bank account that can be withdrawn, or a home that can be sold, in many cases, a retirement account cannot be withdrawn until the owner retires. Owners who pull money from their account before it is ripe will face significant penalties from the financial institution as well as serious tax consequences.

Now, imagine a marriage where one spouse has been paying into a retirement account for 10 years. The account now represents a huge part of the couple’s marital property. What happens if the couple divorces before the account is ripe? Can a retirement account be divided in divorce?

Property Division

In any divorce, the spouses must disclose all their assets and debts, and divide any separate property from the marital property. They must then divide the marital property in accordance with Pennsylvania law.

While a retirement account may be held in the name of just one spouse, it’s common for the other spouse to have a claim to some of the account’s value in divorce. This is especially true if the marriage lasted for a long time. In these cases, fairness demands that the other spouse be compensated for their loss once the marriage is over and they can no longer depend upon the account once they reach retirement age.


To divide a retirement account without triggering the penalties, people going through a divorce can ask a court to issue a Qualified Domestic Relations Order, or QDRO. Essentially, the QDRO instructs the financial institution in charge of the account to divide it according the court’s calculations.

The holder of the original account keeps the majority of the account, while their spouse gets a share of it. This share is deposited in another retirement account for that spouse. Now there are two separate accounts. Both will be subject to the usual limitations. The ex-spouses will most likely not be able to withdraw any funds from the accounts until retirement.