How Retirement Accounts Are Divided In An Illinois Divorce

 Posted on April 20, 2025 in Property Division

An Illinois divorce means spouses will be dividing the marital estate. Many marital assets must be considered during property division, but retirement accounts are often a particularly contentious topic. A skilled Illinois divorce attorney at Ann O’Connell Law, Ltd. will ensure you receive your fair share of the marital estate, including retirement account funds. 

Marital vs. Non-Marital Assets

During a marriage, contributions to retirement accounts, such as 401(k)s, IRAs, and pensions, are typically considered marital property in a divorce. Therefore, retirement funds accumulated during marriage are generally subject to division in a divorce. Retirement account contributions made before marriage are usually non-marital. 

Equitable Division

Illinois courts strive for an equitable division of marital property. Factors the court may consider in the property division include each party’s income, financial situation, marital contributions (including caring for children and the home), future income potential, and duration of the marriage. 

Property Division Methods

State law establishes several means to divide marital property, including retirement accounts: 

• Qualified Domestic Relations Order (QDRO): A QDRO is usually used to divide an employer-sponsored retirement fund, such as a 401(k) or pension. The QDRO instructs a retirement plan administrator to divide an account and make distributions to each spouse according to a divorce decree.

• IRAs: These retirement accounts do not require a Qualified Domestic Relations Order. Instead, IRAs can be divided with a transfer incident to divorce that rolls over part of the account balance to the other party’s IRA, without an early withdrawal penalty. 

• Real estate investments: Some couples own investment properties. Such properties must be evaluated based on current market value and potential appreciation. When real estate is divided, both spouses’ contributions to ownership will be considered. 

• Offsetting assets: Another possibility is that one spouse keeps the 401(k) or IRA, and the other receives the marital home or other asset of similar value. 

What If Your Ex Cashes Out Retirement Accounts Before Divorce? 

First, your ex-spouse should understand that taking money from retirement accounts early can trigger serious tax consequences. Second, regardless of where that money is, it must be accounted for in the divorce settlement. Retirement funds accumulated during the marriage remain marital property, whether in a bank account or tucked away under the mattress. 

Also, the divorce court may take enforcement action if your ex attempts to conceal marital assets, including money in retirement accounts. Have a divorce attorney review your case immediately if you suspect your spouse is hiding marital assets. 

Contact Our Rolling Meadows, IL Family Law Attorneys

Retirement asset division during divorce is complex, so you should retain an experienced Lake County, IL divorce lawyer to ensure retirement funds are distributed equitably. Call Ann O’Connell Law, Ltd. at 847-859-6222 today for a free initial consultation. Our attorneys are highly experienced in complex property division matters.