Retirement accounts can be divided during a divorce in South Carolina, including accounts that may only be in one spouse’s name. How those assets are handled often depends on when the account was funded and whether part of it is considered marital property.
At Query Sautter & Uricchio, LLC, our family law attorneys in Charleston, SC help clients work through the financial side of divorce, including the division of retirement assets. This article explains how South Carolina courts approach these accounts and what the process typically involves.
Are Retirement Accounts Considered Marital Property in South Carolina?
In South Carolina, retirement accounts are treated as marital property to the extent they were funded during the marriage, even if the account is only in one spouse’s name. That applies to 401(k)s, pensions, IRAs, and similar accounts.
Contributions made before the marriage are generally considered separate property. But if an account existed before the marriage and continued growing during it, the portion that accumulated during the marriage may still be subject to division.
South Carolina follows an equitable distribution system, which means marital property is divided fairly, though not always equally. The court may consider the length of the marriage or each spouse’s financial situation when deciding how retirement assets should be handled. In some cases, one spouse may keep the retirement account while the other receives an asset of comparable value, such as equity in the family home. A prenuptial agreement can also affect how retirement assets are treated. In some cases, it may establish that certain accounts remain separate property regardless of when contributions were made.
How Are Retirement Accounts Actually Divided?
In South Carolina, dividing most retirement accounts during divorce requires a separate court order known as a QDRO, or Qualified Domestic Relations Order. This order instructs the plan administrator how the account should be divided between spouses.
Without a properly prepared QDRO, a transfer can trigger unnecessary taxes or early withdrawal penalties. IRAs are handled differently and usually don’t require a QDRO, but the transfer still needs to follow specific rules tied to the divorce agreement. Government and military pensions follow different rules altogether and are not subject to standard QDRO provisions.
A QDRO must also be submitted to the plan administrator after the divorce is final before it can take effect. Beneficiary designations on retirement accounts should also be reviewed and updated, since those don’t change automatically after divorce.
Talk With a Charleston Divorce Attorney
Retirement accounts often represent years of savings, and how they’re divided in a divorce can have long-term financial consequences for both spouses. In some cases, spouses reach their own agreement. In others, the court decides as part of the broader property division process. Either way, working with an attorney who understands both the legal and financial side of retirement account division can help avoid costly mistakes during the process.
At Query Sautter & Uricchio, LLC, we help clients in Charleston and across South Carolina get clear answers about their divorce and what comes next. If you have questions about your situation, contact our team or call 843-795-9500.