Community Property

• As of June 2011, some of your 401k assets may be considered community property if you get divorced in California. Any contributions you made to your 401k after marriage are considered community property. Your ex-spouse can elect to get some of the benefits from your 401k plan when you retire if you are not old enough to retire now. Conversely, the ex-spouse can choose to receive half of the benefits in the account at the time of divorce.
  
  

Waiving of Benefits

• If you choose to waive any of the benefits you are entitled to from your ex-spouse's 401k, ERISA specifies that your divorce decree must spell out which rights are being waived. If your divorce decree does not state that you waive a particular right and your ex-spouse did not remove your name as a beneficiary from the 401k, you have the right to half of the benefits from the 401k, as of June 2011.
  
  

Qualified Domestic Relations Order

• ERISA requires California divorce courts to create a qualified domestic relations order, or QDRO, governing the ex-spouse's rights to her former spouse's 401k. Most QDROs entitle the ex-spouse to the same rights she would have had if the marriage had continued, such as the right to early withdrawal and the right to receive benefits when the account holder receives them. The QDRO cannot grant extra benefits to an ex-spouse beyond those she would be entitled to automatically by marriage.
  
  

Considerations

• After the divorce is finalized, your ex-spouse no longer has the right to half of your 401k benefits. However, if the QDRO states that he receives half your benefits once you retire, he is still entitled to half of all your benefits---not just half of the benefits from the time when you were married. Discuss dividing your retirement plan benefits with your attorney prior to signing any type of QDRO agreement to make sure that the plan is fair, equitable and reasonable.