Short Answer: It depends on when contributions were made to that particular fund. If contributions were made to the fund during the marriage then you are entitled to an equitable portion of those funds. An equitable portion is commonly 50%.
Longer Answer: 401k plans are analyzed under the same rules as all other property in a divorce. For a detailed breakdown of how property is analyzed, you can visit our previous post on the subject of division of property in a divorce. In a divorce, property is classified as belonging to one of three estates, the petitioner’s non-marital estate, the respondent’s non-marital estate, or the marital estate (property belonging to the marriage). Property can also be classified as having portions of multiple estates.
In terms of a defined-contribution retirement plan such as a 401k, it may be singularly classified as marital or non-marital, or there may be both non-marital and marital portions.
A 401k plan would be only marital if it were opened during the marriage and received funds which were also marital. In the vast majority of cases, wages and salary collected by one spouse during the marriage are considered marital. Therefore, your typical 401k opened during the marriage is 100% marital property.
A 401k plan would be classified as containing both non-marital and marital property if it received funds from both a non-marital and marital source.
For example, say Husband opens a 401k plan five years before he gets married and contributes $25,000, and his employer matches that contribution, so he has a total of $50,000 in his 401k. Husband then gets married and over the next ten years contributes $50,000, which is also matched by his employer, for a total contribution of $100,000 during the marriage. The husband now has $150,000 in his 401k plan.
Of the $150,000, the $50,000 contributed before the marriage is considered non-marital property. This property can only be claimed by the husband. The $100,000 contributed during the marriage is considered marital property to which Wife is entitled an equitable portion. While not always, an equitable portion is commonly placed at 50%, although this number should be scrutinized closely based on the relevant factors.
The above is example is admittedly overly-simplified. There is an additional analysis that must take place. Illinois divorce law lays out how property is classified when there has been commingling of non-marital and marital funds. This analysis requires a determination of whether there was a “loss of identity” of the contributed funds, and whether new property was acquired as a result of the commingling. This characterization of the commingling could have significant implications as to the size of the marital portion of a 401k retirement plan. For further reading, check out section 503 of the Illinois Marriage and Dissolution of Marriage Act.