To make a withdrawal from a 401(k) account, you must typically be the account's owner. A spousal 401(k) cannot be touched, even if the spouse is a beneficiary, without the account owner's permission. Even if your spouse is a beneficiary of the account, she can't make withdrawals without your permission. However, if you and your spouse divorce, she may be able to obtain funds from the account with a court order.
Depending on your state's law, your spouse may have rights to your 401(k) as marital property; however, he cannot touch any of the money in the 401(k) without your permission. If you get divorced, the court might award him a portion of the account.
What is Marital Property?
The term "marital property" refers to any asset that both spouses own. If you opened your 401(k) after you and your spouse were married, the contents of the account may qualify as marital property depending upon the laws of your state, and both you and your spouse have rights to them. Even if you opened your account before the marriage, any portion of the funds that accumulated after you and your spouse got married will still qualify as marital property in the eyes of the law, if you live in a state with these types of property laws.
Unauthorized Withdrawals from a 401(k)
Even if your 401(k) qualifies as marital property, your spouse does not have equal rights to the account while you are married. Although your plan may allow you to make a withdrawal without your spouse's knowledge, she cannot make any withdrawals or take loans from the account without your written consent. On the flip side, if any portion of the plan is marital property, some plan sponsors won't even allow you to take money out of the account without first consulting your spouse.
401(k) During a Divorce
If you and your spouse divorce and your 401(k) is marital property, most states will award your spouse a portion of the account. In such cases, the court will order the plan administrator to distribute your spouse's portion of the account directly to her, or it will award her a comparable marital asset and allow you to keep your 401(k) intact. You can also divide it up by agreement. If the court elects to force a distribution from the account, it will issue a qualified domestic relations order, a court order that allows the distribution to occur without incurring early withdrawal penalties.
Past Due Spousal or Child Support
In some cases, a former spouse can claim funds from your 401(k). If you fail to pay court-ordered spousal maintenance or child support and your spouse obtains a judgment against you, the court can issue a QDRO that requires your plan administrator to distribute the money you owe directly from your 401(k). If the payment is for child support, you'll have to pay the taxes on the withdrawal; otherwise, your ex-spouse will be responsible for them.
- RPG: 401(k) Divorce Distribution: What You Should Know
- McKinley Irvin: How a Divorce Can Impact Your 401(k) and Retirement Planning
- U.S. Department of Labor: QDROs - The Division of Retirement Benefits Through Qualified Domestic Relations Orders
- IRS: Retirement Topics - QDRO - Qualified Domestic Relations Order