Couples divorcing in Maryland must separate their finances and property as they go their separate ways. Some assets obviously belong to both spouses, such as a home where they are both on the deed and the mortgage.
Other assets might be in the name of just one spouse. Many professionals contribute to 401(k) accounts through their employment. They may even receive employer-matching contributions that augment their personal savings.
One spouse might insist that the 401(k) in their name is their separate property because they have been the only one funding it or they opened the account before marriage. Is an employer-sponsored retirement savings account divisible in a Maryland divorce?
Retirement accounts are often marital property
Under Maryland’s equitable distribution statute, assets acquired during marriage are potentially subject to division. Even if the courts do not directly divide all marital property, they may consider the value of all marital property when making decisions about other assets and marital debts. Unless there is a marital agreement explicitly designating a 401(k) as the separate property of one spouse, the amount added to the account during marriage is likely part of the marital estate.
Spouses do not automatically need to divide the account, as they can use other assets or responsibility for marital debts to offset the value of the account in the divorce. If they must divide the account, it is typically possible to do so without incurring penalties and risking income tax consequences if people use the appropriate documents.
Reviewing marital assets with an experienced family law attorney can help people understand the law and set achievable priorities. Pensions and retirement accounts are often divisible even when held in the name of one spouse.
