What Will Happen to Retirement Accounts in Our Divorce?

 Posted on September 15, 2026 in Property Division

Retirement accounts may be one of the largest assets a couple owns, and feelings about them can be strong. Whether and how a retirement account is divided depends largely on how much of it was earned during the marriage..

A Western Springs, IL divorce attorney can explain how Illinois courts will divide retirement accounts in your 2026 case.

Are Retirement Accounts Considered Marital Property in Illinois?

Pension benefits and other retirement accounts earned after a marriage began are presumed to be marital property (750 ILCS 5/503(b)(2)). Money earned in the account before the marriage generally remains separate property, along with growth on that part of the account.

If you had a retirement account before you got married and kept contributing during the marriage, the part earned during the marriage is typically divided between spouses. This does not necessarily mean it will be split 50/50. Determining how much of the account is marital property requires reviewing the account records.

How Is a 401(k) or Pension Divided in an Illinois Divorce?

Illinois courts divide marital property equitably. This does not necessarily mean a 50/50 split, but rather a fair one. Judges consider factors like the length of the marriage, each spouse's financial situation, and what other assets each will receive in the division.

Splitting an employer-sponsored plan usually requires a special court order called a qualified domestic relations order, or QDRO. A QDRO tells the plan administrator how to divide the account. It can also help divide the account without triggering an early withdrawal penalty. The receiving spouse can often roll the money into another retirement account without paying taxes right away. Because the plan administrator can take time to approve a QDRO, it is often helpful to start the process before the divorce is final.

Do You Need a QDRO to Split Every Retirement Account in an Illinois Divorce?

Divorcing couples in Illinois may need to divide several types of retirement accounts:

• 401(k) and 403(b) plans

• Pension plans

• Traditional and Roth IRAs

• Military or government pensions

Many private employer retirement plans, including 401(k)s, use a QDRO. IRAs do not. They are usually divided through a transfer made as part of the divorce. This is handled directly with the IRA custodian rather than a plan administrator.

Government and military retirement plans can have different rules and may require a different type of court order. It's worth confirming how your specific plan is regulated to ensure you don't encounter withdrawal penalties.

Do You Need to Update Your Beneficiary Designations After Your Divorce?

Dividing an account is only one step. You should also review the beneficiary listed on each retirement account after the divorce. The rules can vary by plan, so do not assume that the divorce automatically changes your beneficiary. If your ex-spouse is still named, they could end up with the funds even if your divorce decree says otherwise.

It is important to review each retirement account after the divorce is finalized and update the beneficiary forms if needed.

Can You Negotiate to Keep Your Entire Retirement Account in Your Illinois Divorce?

Some couples decide it makes more sense to offset a retirement account against other marital property instead of splitting the account itself. You might keep your full 401(k), for example, while your spouse receives a larger share of home equity or other savings.

What Happens If You Cash Out a Retirement Account Before a Divorce Is Final in Illinois?

Withdrawing money from a retirement account before your divorce is finalized can create problems. Early withdrawals often come with tax penalties. Taking out marital retirement funds during a divorce can also affect how the court divides property, especially if the money is spent for reasons unrelated to the marriage.

If you need funds during the divorce process, talk to your attorney before touching a retirement account. There may be other ways to access cash without triggering unnecessary tax penalties or raising questions about your intentions. Waiting until property division is finalized can also help you avoid an unfavorable tax outcome.

Call a Wheaton, IL Divorce Attorney Today

Retirement accounts are valuable assets that should be handled with care. An experienced attorney can help you work toward a fair division while avoiding unnecessary taxes and penalties.

Roberts PC works hard to settle family law cases and keep costs down. We're also fully prepared to take your case to trial when needed. We regularly handle larger cases for business owners, professionals, doctors, lawyers, and judges, including the retirement and pension issues that often come with them. Every client also gets Attorney Chuck Roberts' personal cell phone number and email address.

Call our Western Springs, IL asset division lawyers at 630-668-4211 today to schedule your free consultation about your accounts.