David Centeno

What Happens to Retirement Accounts in a NY Divorce?

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What Happens to Retirement Accounts in a NY Divorce?

Divorce can be emotionally and financially complex—especially when retirement accounts are on the line. In New York, retirement assets are sometimes the most valuable pieces of the marital puzzle. If you’re going through a divorce, it’s important to understand how these accounts are treated under state law, and what you can do to protect your financial future.

A lot of people call us and think that retirement assets are not considered in a divorce. They are mistaken and I am happy that they call for a free consultation, so that we can let them know how we can help and what needs to be dealt with.

Are Retirement Accounts Considered Marital Property?

In New York, equitable distribution governs how property is divided in a divorce. This doesn’t always mean a 50/50 split—it means a division that is fair, though not necessarily equal.

Retirement accounts are considered marital property—but only the portion accumulated during the marriage. That means:

  • If you or your spouse had a 401(k), IRA, pension, or other retirement account before the marriage, only the contributions and growth during the marriage are typically subject to division.

  • Contributions made after the date of filing for divorce are usually considered separate property.

Types of Retirement Accounts and How They’re Divided

Retirement assets come in different forms, and each has its own method of division:

  • 401(k)s and IRAs: These are defined contribution plans and are generally divided by percentage or dollar value.

  • Pensions: These are defined benefit plans and often require actuarial calculations to determine the present value of the marital portion.

  • Military and Government Pensions: Special rules may apply and may require specific language in the divorce agreement to preserve rights to survivor benefits.

What Is a QDRO?

For employer-sponsored plans like 401(k)s and pensions, you’ll typically need a Qualified Domestic Relations Order (QDRO). This is a court-approved order that tells the plan administrator how to divide the retirement account without triggering taxes or penalties.

Important notes about QDROs:

  • They are separate from the divorce judgment—you must have a QDRO prepared and approved post-divorce.

  • Mistakes in drafting or failing to file one can result in significant financial loss.

Tax Considerations

One advantage of using a QDRO is that the recipient spouse can roll over their share into an IRA without immediate tax consequences. However, if you choose to cash out funds instead of rolling them over, expect to pay income tax—and possibly early withdrawal penalties.

IRAs are governed under different rules and don’t require a QDRO, but must be divided pursuant to a divorce decree or settlement agreement to avoid penalties.

Can You Keep Your Retirement Accounts?

In some cases, yes. Spouses can negotiate a trade-off during the divorce—such as one party keeping the retirement account while the other keeps an asset of equal value (like a house or cash).

However, make sure you:

  • Get accurate valuations (including tax impact).

  • Consider long-term growth potential.

  • Think about your future financial security, not just short-term gains.

Don’t Go It Alone

Retirement accounts are too important to leave to chance. If you’re divorcing in New York, working with an experienced divorce attorney can help ensure that your financial interests are protected and that any division of retirement assets is done correctly.

You or your spouse can waive your rights to the other’s retirement assets—it just needs to be in the correct and legally binding way.

At David Centeno Law, we focus on uncontested and amicable divorces that prioritize fairness and financial clarity. If you know what the terms of your divorce will be, we can handle your matter as a flat fee uncontested divorce. If you need help figuring out the terms, we can help you navigate the process with ease and remain out of court. Whether you’re dealing with a simple IRA or a complex pension plan, we can help you achieve a clean break with confidence.

Need Help Navigating Your Divorce?

Call us today at (866) 830-2064 to schedule a confidential free phone consultation to learn how we can protect your retirement and your future.