When going through a divorce, one of the most commonly overlooked but highly valuable-assets is the retirement account. Whether it's a 401(k), IRA, pension, or other retirement plan, these accounts often represent years of hard work and long-term financial planning. In Michigan, retirement accounts are considered marital property if they were earned or contributed to during the marriage, which means they are subject to division.

Here’s what you need to know about how retirement accounts are handled during a divorce in Michigan.

Are Retirement Accounts Considered Marital Property?

Yes-at least partially. In Michigan, any portion of a retirement account accumulated during the marriage is generally considered marital property, regardless of whose name is on the account. Contributions made before the marriage may be considered separate property, but it depends on how those funds were handled over time.

Types of Retirement Accounts Commonly Divided:

401(k)s and 403(b)s
Traditional and Roth IRAs
Pensions and defined benefit plans
Military and government retirement plans
SEP and SIMPLE IRAs

Equitable Distribution in Michigan

Michigan follows the principle of equitable distribution, which means marital assets are divided fairly-but not always 50/50. The court considers factors such as:

Length of the marriage
Each spouse’s income and earning potential
Age and health of each party
Contributions to the household or career sacrifices

What Is a QDRO?

A Qualified Domestic Relations Order (QDRO) is a legal order required to divide certain types of retirement plans, like 401(k)s or pensions, without triggering early withdrawal penalties or tax consequences. The QDRO tells the retirement plan administrator how to divide the benefits between spouses.

Without a QDRO in place, attempts to split these types of accounts can be complicated and costly.

Do IRAs Require a QDRO?

No. IRAs do not require a QDRO, but the transfer still needs to be done properly to avoid penalties. Typically, this is handled through a direct transfer or rollover that must be clearly outlined in the divorce decree.

Special Considerations When Dividing Retirement Assets

1. Valuation

It's important to get an accurate valuation of retirement accounts at the time of divorce. This includes checking:

Current balances
Outstanding loans
Vesting schedules
Projected future value

2. Tax Implications

Not all retirement assets are taxed the same. A $50,000 Roth IRA is not equal to a $50,000 pre-tax 401(k), because taxes will be due on the latter during withdrawal.

3. Future Contributions

Only the funds accumulated during the marriage are typically divided. Contributions made after the divorce are considered separate property.

What You Can Expect

Detailed Asset Review: We help gather and evaluate all retirement accounts to ensure nothing is overlooked.
Coordination with Financial Professionals: We work with CPAs, financial advisors, and actuaries when needed to understand complex valuations.
Proper Legal Documents: We draft and file QDROs to ensure smooth, penalty-free transfers.
Clear Communication: We make sure you understand your rights, obligations, and financial future.

Protect Your Financial Future

Dividing retirement accounts during a divorce isn’t just about splitting numbers-it’s about protecting your long-term financial stability. Having the right legal support can ensure the process is handled correctly and fairly.

Contact Harris & Literski today to schedule a consultation and learn how we can help you navigate the division of retirement assets during your Michigan divorce.

Dividing Retirement Accounts in a Michigan Divorce: What You Need to Know