What is the benefit of using mediation to divide retirement accounts in divorce?

Mediation allows couples to maintain control over how retirement assets are divided, rather than having a judge decide for them. It is also faster, more cost-effective, and less stressful than litigation.

How much does mediation cost compared to a litigated divorce?

Mediation typically costs between $5,000 and $7,000 total, while a litigated divorce can cost $17,000 per spouse or more. Mediation is significantly more affordable and allows for a smoother process.

What is a Qualified Domestic Relations Order (QDRO)?

A QDRO is a legal document that ensures one spouse receives a portion of the other spouse’s retirement plan without triggering early withdrawal penalties or taxes. It is necessary for dividing employer-sponsored retirement plans like 401(k)s and pensions.

Can retirement accounts be divided without a QDRO?

Some retirement accounts, like IRAs, do not require a QDRO and can be divided through a direct transfer. However, employer-sponsored plans like 401(k)s and pensions require a QDRO to avoid tax consequences.

What if one spouse wants to keep the entire retirement account?

In mediation, couples can agree to offset the retirement account with other assets, such as real estate or cash savings, to ensure a fair division without splitting the account itself.

What happens if we can't agree on how to divide retirement assets in mediation?

A skilled mediator will help facilitate discussions to find a fair and practical solution. If a full agreement cannot be reached, couples can still resolve most issues in mediation and use limited legal support for remaining disputes.

How Mediation Helps Divide Retirement Accounts in Divorce | Haas Mediation - Haas Mediation & Training | NY-based Mediation services specializing in divorce, family & support, corporate and religious faith mediation

Dividing Retirement Accounts in Divorce: A Smarter, More Peaceful Approach

Dividing retirement savings during a divorce can feel overwhelming. After years of working and saving, the idea of splitting 401(k)s, pensions, and IRAs can bring up financial fears and emotional stress. Many people worry:

Will I have enough for retirement if we divide these assets?
How do we decide what’s fair?
Will we have to fight it out in court?

The good news? You don’t have to go through a long, costly court battle to figure this out. Mediation offers a calm, collaborative, and cost-effective way to create a fair plan that works for both of you. At Haas Mediation, we help couples make thoughtful, personalized decisions about dividing retirement accounts—without letting a judge decide for them.

If you have specific questions about your retirement accounts, schedule a complimentary, no-pressure call.

Why Is Mediation the Best Way to Divide Retirement Accounts?

Many divorcing couples assume that retirement accounts must be divided by a judge in a litigation process. But in reality, mediation allows you to decide together what’s fair and how you want to handle these assets.

1. Mediation Saves Time and Money

Litigating your divorce—especially when financial assets are involved—can drag on for months or even years, with attorney fees adding up quickly. In contrast:

Mediation is typically completed in 3-6 months, compared to 12-24 months for litigation.
The cost of mediation is significantly lower than attorney fees and court costs.

2. You Stay in Control of the Decisions

In a traditional litigated divorce, a judge makes decisions about your assets based on legal formulas rather than what makes the most sense for you. Mediation allows you to:

Work together to decide what division feels fair.
Consider creative solutions that a judge wouldn’t necessarily order.
Focus on long-term financial security for both spouses rather than short-term wins.

3. A Less Stressful, More Amicable Process

Dividing assets is emotional, but mediation provides a structured, supportive environment to have these conversations. At Haas Mediation, we guide couples through the process with compassion and clarity, helping them avoid unnecessary conflict and reach mutually agreeable solutions.

How Are Retirement Accounts Divided in Mediation?

1. Identifying Retirement Assets

The first step is to create a list of all retirement accounts, including:

401(k)s, 403(b)s, and other employer-sponsored plans
Pensions
IRAs (Traditional & Roth)
Annuities
Other investment retirement accounts

We ensure that both spouses have a clear understanding of what assets exist, which is essential for making informed decisions.

2. Deciding on a Fair Division

New York is an equitable distribution state, meaning that retirement assets don’t have to be split exactly 50/50—but they do have to be divided fairly based on factors like each spouse’s financial situation, contributions to the marriage, and future needs. Mediation allows you to explore different ways to divide your retirement savings without being locked into a court-mandated formula.

Here are some common approaches couples consider when dividing retirement assets in mediation:

A. Equal Division

Many couples choose to split their retirement accounts equally, especially if both contributed to their financial future throughout the marriage. This is a straightforward option where:

Each spouse receives 50% of the marital portion of the retirement accounts.
A QDRO (Qualified Domestic Relations Order) is used to divide employer-sponsored plans without penalties.
The receiving spouse can roll over their portion into an IRA or another retirement account.

B. Offsetting Retirement with Other Assets

Instead of splitting the accounts, some couples prefer a trade-off approach, where one spouse keeps the entire retirement account while the other receives assets of equal value, such as:

The marital home
A larger share of savings or investments
Spousal support adjustments to balance out the division

This approach works well when one spouse has a strong emotional attachment to a specific asset or if it’s financially advantageous to keep the retirement intact.

C. Gradual Division Over Time

For some couples, an immediate division isn’t ideal—especially if one spouse is still working and contributing to their retirement account. In this case, mediation allows for flexible solutions like:

A delayed split where the retirement account is divided at a future date (e.g., upon retirement).
Phased payouts over time rather than a lump-sum transfer.
A percentage-based division that adjusts depending on future earnings or contributions.

D. Customized Solutions That Work for Both Spouses

Since mediation allows couples to think outside the box, you aren’t limited to traditional division methods. Some couples may:

Agree that one spouse keeps the entire retirement account in exchange for reduced alimony or other financial adjustments.
Opt for a hybrid approach, where a portion of the retirement is split, and the rest is offset with assets.
Structure the division based on each spouse’s financial future, ensuring both have long-term financial security.

3. Understanding QDROs (Qualified Domestic Relations Orders)

A Qualified Domestic Relations Order (QDRO) is a legal document that allows retirement funds to be transferred without penalties or tax consequences. It ensures that a portion of one spouse’s retirement funds goes to the other without triggering early withdrawal fees.

In mediation, we’ll discuss:

When a QDRO is needed and how it works.
The importance of working with a professional to draft a QDRO.
How to ensure the division aligns with the couple’s financial goals.

We’ll cover QDROs in detail in our next blog, but in mediation, we help ensure the process is smooth and straightforward.

Why Choose Haas Mediation?

At Haas Mediation, your priorities shape the process. Our approach is:

Client-Centered: Your values and long-term goals guide the conversation.
Cost-Effective: Avoid unnecessary legal fees and court costs.
Tailored to Your Needs: Whether you have kids or not, mediation provides a customized plan that works for your unique situation.
Focused on the Future: We help you reach agreements that provide long-term financial security for both parties.

If you’re ready to take control of your divorce in a calm, productive way, schedule a complimentary call today.