The 401(k) Divorce Rules in New York State

In New York, the courts divide all marital assets---that is, all property acquired during the marriage, with some exceptions. Pensions, 401(k) accounts and other retirement benefits earned during the marriage are marital property and can be divided between the spouses at divorce. However, any money put into a 401(k) before the marriage, or after the separation, is separate property and stays with the spouse who earned it.

Residency Requirements

To qualify for a divorce in New York, one of the parties must been a resident of New York for the past year and the couple either married in New York, lived in New York as a married couple or the cause for the divorce occurred in New York. Otherwise, there is a two-year residency requirement.

Property Distribution

New York is an equitable distribution state, meaning the court divides marital property by what is fair, rather than a straight 50/50 split. Marital property is any property acquired during the marriage, including income or other funds contributed to a 401(k) during your marriage. Separate property is all property acquired before the marriage, or after the separation, plus any gifts of inheritances acquired during the marriage. This means your spouse is entitled to a portion of your 401(k) but may not be awarded it at divorce.

Property Awards

New York encourages parties to come to their own property distribution agreement but when the parties fail, the courts will divide the property based on the following considerations: the financial situation of each party, the duration of the marriage, the age and health of each party, which party has custody of the minor children, the loss of inheritance or retirements plan due to divorce, any dissipation of marital assets by one or both parties, the tax consequences of divorce, and other discretionary factors.

Automatic Orders

Certain orders are automatically applied to any divorce case filed after September 1, 2009 in New York. According to, one automatic order applies specifically to 401(k)'s. Under New York law, neither party can transfer or withdraw funds from 401(k) accounts before a divorce is finalized. If you or your spouse removes or moves money, the court will require money will need to be returned or repaid, or the spouse who took the money will be awarded a much smaller amount of marital property to offset what was taken.