In New York, retirement accounts like 401(k)s are generally considered marital property subject to equitable distribution in a divorce if contributions were made during the marriage. This means the court will divide the portion of the account accrued from the date of the marriage to the date of the commencement of the divorce action, typically the date of filing the summons with notice or summons and complaint, between the spouses. Separate property generally includes assets acquired before the marriage or through inheritance or gift during the marriage. However, even if a 401(k) was established before marriage, any increase in its value during the marriage due to market gains, employer matching, or contributions from employment earnings is subject to distribution. A Qualified Domestic Relations Order (QDRO) is typically required to formally divide the retirement asset.
Understanding the implications of marital property laws regarding retirement accounts is crucial for individuals entering or dissolving a marriage in New York. This knowledge allows for informed financial planning and decision-making, potentially mitigating future disputes. Historically, retirement assets were often overlooked in divorce proceedings. However, as these assets have become a more significant component of individuals’ financial portfolios, their treatment under equitable distribution laws has become increasingly important.
