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Dividing a 401(K) or Pension in a Texas Divorce Over Two Decades of Experience on Your Side

Dividing a 401(K) or Pension in a Texas Divorce

Questions often arise over how to divide a 401(k) during a Texas divorce. Let's consider the possibility of a homemaker, divorcing her husband of 40 years. The stay-at-home mom doesn't have a 401(k) of her own, since she worked in the house, taking care of her family the last 40 years. Nevertheless, the working father has amassed a large 401(k) amounting to about $600,000. How will they divide these assets in their divorce?

The 401(k) is in the husband's name. However, these assets accrued over the course of the marriage, so a family law court will classify them as "community property." In other words, the 401(k) will be part of the marital estate and divisible between the spouses.

In a case like the one described above, the court will often award half of the 401(k) assets to each of the spouses. The wife, in this case, will then need to file a Qualified Domestic Relations Order (QDRO), and submit it to the employer, who must distribute the 401(k) benefits between the spouses according to the asset division order.

If the 401(k) is a cash account, the spouses can request payment of the proceeds within 30 to 90 days. This payment may incur tax liabilities. Alternatively, they can ask to receive the benefits upon retirement to continue taking full advantage of the tax-deferred benefits.

It should be noted, even when a Texas court classifies 401(k) benefits as "community property," it does not mean that the spouses will always divide the account 50/50. For example, if the other spouse has a 401(k) of a similar size, the court may order each spouse to keep his or her respective accounts.

A lot of different considerings can come into play during Texas asset division proceedings. As such, spouses may want to work with an experienced family law attorney -- such as the lawyers at the Barker Law Firm in Houston, Texas -- to evaluate their situations and develop the most suitable legal strategy in their high net worth divorce case. At the Baker Law Firm, our attorneys are available to speak with you about your divorce proceedings in a free, no-obligation, first time consultation.

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    Georgia Barker

    Founding Attorney

    Georgia Barker was born in Corpus Christi, Texas and has lived in Houston for most of her life. She attended the University of Texas at Austin and earned a Bachelor of Business Administration. In her graduating class at UT Austin, there were 101 men and only 3 women. Ms. Barker earned a Doctor of Jurisprudence from the University of Tulsa, College of Law and was a member of Phi Alpha Delta Law Fraternity. She was admitted to the Oklahoma State Bar and the following year admitted to the Texas ...
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