Retirement Assets in Divorce Mediation

By Jennifer Gardella | July 31, 2025

In any divorce, marital assets need to be divided, and other issues, such as child custody and spousal support, must be resolved.

At the Law Office and Mediation Services of Elissa C. Goldberg, LLC, we believe that the divorce mediation process offers the most effective, affordable, efficient, and low-stress method of resolving your differences. It helps people reach agreements and get to the final divorce settlement with peace.

Mediation also keeps every member of the family in mind and works in the best interest of everyone. Dividing retirement assets is an important part of the negotiation process in our Bucks County office.

Types of retirement assets

When most people think of retirement funds, they usually think first of IRAs and 401(k)s. These are among the most common, but there are other types of retirement funds, including:

403(b) which is similar to a 401(k) but for non-profits like public schools
Roth IRA
Military pension or other pension
Keogh fund or SEP IRA (like a 401(k) and IRA for the self-employed)
Annuity fund
Vacation fund
Veteran’s educational benefits
Retirement supplement fund
Employee stock option plan (ESOP)
Social Security payments
Compensation for military injury
Worker’s compensation payments

Splitting retirement assets

Unless you have a prenuptial agreement, most anything you purchase or earn after your wedding is considered marital property. When dividing assets, you may choose a valuation buy-out or to split accounts, or you may use the values of the accounts as leverage in negotiation.

When dividing a 401(k), 403(b), or pension fund, you need a qualified domestic relations order (QDRO). A QDRO is a special order that allows the administrator to cash out a portion of the fund before the permitted age limit (in most cases 59.5 yrs) without the person receiving a 10% penalty fee. Keep in mind that, if you take cash from the fund, you will be charged income tax at your personal income tax rate, so it’s important to have a tax accountant involved in your decision.

You do not need a QDRO for an IRA or Roth IRA; if you choose to split an IRA, you simply need to direct the administrator to transfer the agreed-upon amount to a new IRA account for the other spouse. You will need to submit a form to the administrator, indicating that the transfer is “incident to divorce.” If you choose to take the IRA portion in cash rather than transferring it to another IRA and you are below the age of withdrawal (59.5 years), you will pay an early withdrawal penalty. You will also have to pay taxes on cash from a regular IRA, but not a Roth IRA, since Roth IRA contributions are made in post-tax dollars.

Determining the value of retirement assets can be challenging, and if you have a complicated portfolio, we may need to utilize the services of a financial analyst or pension valuator to determine the present and future values of the various funds. Retirement funds can then be used as part of the negotiation, as possible trade-offs for other assets that one of you wants to keep. If, however, you both have retirement accounts of similar value, you may decide to leave them out of the negotiating process. In mediation, we have the flexibility to come to a compromise that satisfies both parties.

Negotiating what is best for you

Determining what is best for you and your family is one of the benefits of divorce mediation over litigation. In court, a judge will decide how your assets, including your retirement assets, should be divided. If you want freedom to choose what’s best for your family and your future, I recommend mediation. Collaborative law is another option, in which you each have a lawyer who works for you, but everyone agrees to stay out of court. This can be an excellent option for more complicated portfolios.