How an IRA Is Split During Divorce

Getting divorced can raise some important financial questions, including how to handle the division of retirement assets. If you and your soon-to-be former spouse have individual retirement accounts, you might be wondering how to split an IRA in divorce equitably, or whether you even need to. The division of those assets in a divorce generally depends on whether the accounts are considered marital or separate property and how property is divided in your state.

Consider speaking with a financial advisor to help you navigate the potentially complicated financial logistics of divorce.

What Is an IRA?

An IRA, or individual retirement account, is a tax-advantaged account that allows you to save money independently of an employer-sponsored retirement plan. There are two basic types of IRA: traditional and Roth.

Traditional IRAs allow for tax-deductible contributions and tax-deferred growth. Qualified withdrawals are taxed at your ordinary income tax rate, and early withdrawals may be subject to a 10% penalty. Beginning at 73, you’re obligated to take required minimum distributions (RMDs) from a traditional IRA and you can no longer make new contributions.

Roth IRAs don’t offer a tax deduction for contributions, but qualified withdrawals are tax-free. You can withdraw your original IRA contributions at any time, and there are no RMDs.

As of 2025, the annual contribution limit for both traditional and Roth IRAs is $7,000, or $8,000 if you’re age 50 or older.

Who Gets an IRA in Divorce?

There are legal rules that apply to assets—including retirement accounts—when making divisions in divorce. Where you live will play a deciding role in how assets are split by law. To determine how to split an IRA in divorce, you first have to consider two things:

Whether IRAs are considered marital or separate property
How marital property is divided under your state’s laws

Marital property generally means any property a couple acquires while they’re married. That can include real estate, vehicles and retirement accounts. An IRA that was opened after the marriage took place can still be considered marital property even if it’s owned by one spouse and the other spouse is not listed as the primary beneficiary.

Separate property refers to property that was owned before the marriage. So if you opened and contributed to an IRA before you were married, that IRA would be considered separate property. That said, the distinction can get tricky since some states may deem contributions made while you were married as marital property. And still, other states may allow contributions that were made after separation but prior to divorce to be categorized as separate property.

IRAs inherited by one spouse are usually considered separate property. These accounts can fall under the marital property umbrella, however, if they’re commingled with assets belonging to the other spouse.

In terms of how marital property is divided at the state level, a handful of states follow community property rules. That means that legally, spouses are considered to jointly own all assets acquired during the course of the marriage. In those states, courts may use a 50-50 split to divide IRAs and other assets as part of the final decree.

If you live in an equitable distribution state, on the other hand, the court can divide IRAs and other assets based on what’s considered fair to both spouses. That doesn’t mean that you and your spouse can’t work together to form your own agreement about how to split an IRA in divorce. But it’s up to the court to decide whether to approve such an agreement.

How to Split an IRA in Divorce

Splitting an IRA in a divorce proceeding starts with understanding how much of the money in the account is marital property. To make that determination, you’ll need to know:

When the IRA was opened
How much was contributed to the IRA
When those contributions were made

Again, an IRA becomes marital property once you’re actually married. If you had an IRA going into the marriage, you should be able to exclude any amounts in the account up to that point. What counts as marital property is the value of the account from the time you were married up to either the date you legally separated or the marriage ended, whichever rule applies in your state.

So, for example, if you had $200,000 in your IRA before you got married and its value increased to $600,000 during the course of the marriage, only $400,000 of that could be considered marital property. Again, how much of that balance your spouse is entitled to depends on whether you live in a community property or equitable distribution state.

Once you’ve calculated the division of IRA funds, the next step is arranging for the transfer of the money. The spouse who’s on the receiving end will need to have their own IRA established. In your divorce decree, you can specify where to send the money, and then your IRA custodian will handle the transfer of money to your spouse’s IRA.

At that point, your former spouse can do what they’d like with the money, whether that’s rolling it into a new IRA or withdrawing it. The same goes for you if you’re the one receiving a transfer of IRA money.

Tax Implications for Splitting IRAs in Divorce

Assuming that IRA funds are transferred directly—meaning the custodian handles the movement of money—there are no immediate tax consequences to either party. If either of you decides to take a distribution from your IRA and you’re under age 59 ½, however, you’d owe income tax on the withdrawal as well as a 10% penalty.

A direct transfer of IRA funds is not required, though. The receiving spouse could request that a check be sent to them directly. They’d then have 60 days from the date of the distribution to redeposit the money into an IRA. There are, however, some considerations that make this a less attractive option.

For one, the original IRA custodian will withhold 20% off the account balance for taxes. That means that if you’re receiving money from an IRA as part of a divorce settlement, you’re automatically getting 20% less than you would with a direct transfer.

The other issue is what happens if you fail to put the money back into an IRA within the 60-day window. If you don’t deposit the money on time, then the entire amount is treated as a taxable distribution. Again, you’ll owe income tax and, if you’re under age 59 ½, a 10% early withdrawal penalty.

Do You Have to Split an IRA in Divorce?

A couple thinking about splitting assets.

You don’t necessarily have to hand over part of your IRA to your spouse if they’re willing to reach a compromise with you. You might offer them assets that are equivalent in value to what they’d get if you were to split your IRA. Instead of giving them $400,000 in IRA money, for instance, you might allow them to keep your vacation home that’s valued at $400,000.

Whether it makes sense to make—or accept—such an offer can depend on your overall financial situation and goals. Talking to your financial advisor can help you decide if this option is worth considering. You may also want to talk to a tax professional about any potential tax implications that might be involved in settling other assets with a former spouse.

Remember that anything you decide with regards to property division needs to be put in writing and approved by the court. Making verbal agreements about financial or other issues relating to the divorce could cause issues down the road for both you and your ex-spouse.

How to Protect Your IRA Before and During Divorce

Protecting your IRA in a divorce starts with maintaining clear documentation and understanding how your contributions are treated under state law. If you opened an IRA before marriage, it may be considered separate property, but you need to keep records showing the account’s value at the time of marriage. It’s also important to avoid mixing or “commingling” assets—for example, by making contributions from joint accounts—because that can make it harder to argue that part of the account should remain separate.

During the divorce process, it’s essential to review your IRA statements, contribution history and any rollovers to determine what portion may be considered marital property. A financial advisor can help you calculate the value of contributions made during the marriage and evaluate how the division could affect your long-term retirement outlook. You can also explore alternative settlement options, such as offering equivalent assets in place of IRA funds, to retain control over your retirement account.

Finally, don’t overlook beneficiary designations. After a divorce is finalized, many people forget to update the listed beneficiary on their retirement accounts. Failing to make changes could result in an ex-spouse receiving your IRA assets in the event of your death, even if your divorce decree says otherwise. Keeping your records current and reviewing your financial plan with professionals can help protect your retirement savings through and beyond a divorce.

Bottom Line

Determining how to split an IRA in divorce starts with understanding the property division laws in your state. A good divorce attorney or even an estate planning attorney should be able to explain how it works where you live. And if you expect to receive IRA assets following a divorce, make sure to give some thought to the best way to put them to use.

Retirement Planning Tips

If you’re unsure, you can talk to your financial advisor about the best way to approach splitting an IRA in divorce and alternatives you might want to consider. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you or your spouse has a 401k or similar retirement plan at work, you’ll need a qualified domestic relations order (QDRO) to divide those assets. A QDRO is required for each account you’re splitting and your plan sponsors are responsible for distributing funds to the recipient spouse. Fortunately, you do not need a QDRO to divide IRA assets.