401k and Divorce in Massachusetts – All You Need To Know

You’ve worked so hard to build up your 401k, and your spouse contributed very little to retirement savings. You were the disciplined one, saving up as much as you could for retirement. And now that you’re getting divorced, how is it fair that you have to give up half of it?

What exactly happens to your 401k or any other retirement asset in divorce is determined by how your assets and liabilities are divided.

Massachusetts is an “equitable distribution” state, so the aim is to distribute the assets “fairly.” To determine what exactly is fair, the court will consider several factors, including the length of the marriage, the ages, health, occupations, income, vocational skills, employability, and estate of each party, the conduct of the parties during the marriage, and the parties’ liabilities and needs, among other factors. The court may also consider the parties’ contributions to the marriage.

The bottom line is that the longer the marriage and the more comparable the overall contributions of the parties to the marriage, the more likely it is that the judge will divide equally the retirement assets including 401k balances. Remember that “contributions” include non-economic contributions, such as taking care of the children and the home.

But what happens if one party has all the retirement savings and the other has none?

That depends on the combination of the factors mentioned above. For example, if a couple was married for 10 years and their overall contributions were approximately equal, but one party saved a significant amount of 401k money while the other paid some of the household bills and did most of the work involving the children, the 401k money belonging to that one party may end up being divided equally.

On the other hand if one of the parties saved carefully during the marriage, while the other recklessly spent on gambling or some other addiction, the court may order a disproportionate division of assets, and the party with the retirement savings may keep some or all of it. And if the parties were married for only a very short period of time, the court is likely to send each party away with what they have, so a party with all the retirement savings may keep all of it.

Judges have a significant amount of discretion in determining how assets should be divided. Therefore, each case must be considered on its individual facts and circumstances. But as a general rule, as the marriage length increases, and if the contributions of the parties are comparable, and there isn’t any extraordinary financial waste or reckless spending, there’s a significant likelihood that the court will divide the 401ks and other retirement assets approximately equally.

If you have any questions about division of retirement in divorce, feel free to contact us.