Understanding How Retirement Benefits Are Divided in a Michigan Divorce

For many people, retirement savings represent decades of work and the foundation of their long-term financial security. When a marriage ends, questions naturally arise about what happens to those accounts—and how divorce may affect your future ability to retire comfortably. Michigan law provides clear guidelines for dividing pensions, 401(k)s, IRAs, and other retirement benefits, but the process can be complex and highly dependent on each couple’s circumstances.

Below is a comprehensive look at how Michigan courts approach retirement division, what protections may be available, and what steps you can take to safeguard your financial future.

Are Retirement Benefits Divided in Michigan Divorces?

In most cases, yes. Michigan treats retirement benefits earned during the marriage as marital property, even if the account is held in only one spouse’s name. This includes:

Traditional and Roth IRAs
401(k), 403(b), and similar employer plans
Defined-benefit pensions
Union or public-sector retirement programs

If the account was opened before the marriage, only the contributions and growth that occurred during the marriage are typically considered marital property. Similarly, if a pension is based on years of service or a points system, the portion earned while married is the part subject to division.

Michigan follows an equitable distribution system—meaning courts aim for a division that is fair, not automatically 50/50. Factors such as the length of the marriage, each spouse’s financial picture, and each spouse’s contributions to the household can all influence how retirement assets are divided.

How Courts Divide Retirement Accounts and Pensions

For defined-contribution accounts (like 401(k)s), courts often assign spouses a percentage of the marital portion of the account. For pensions, the court typically determines what share of the pension was earned during the marriage and awards each spouse an equitable portion of that benefit.

To formally divide most employer-sponsored plans, the court must enter a Qualified Domestic Relations Order (QDRO) or Domestic Relations Order (DRO). This order instructs the plan administrator on:

How much of the benefit should be allocated to each spouse
Who the “alternate payee” is
When and how benefits should be paid

Once processed, the administrator sets up a separate account or benefit entitlement for the non-employee spouse. This process allows the division to occur without triggering taxes or penalties that would normally apply to early withdrawals.

Protecting Your Retirement Savings

While many retirement benefits are divisible, there are strategies that may help protect part of what you’ve earned:

Prenuptial or Postnuptial Agreements

A valid marital agreement can designate retirement assets as separate property. These documents must be entered into voluntarily, with full financial disclosure, and not in anticipation of divorce.

Documenting Premarital Funds

Keeping records of contributions and account values from before the marriage can help ensure that portion remains separate.

Negotiating a Settlement

Spouses can often reach an agreement—through mediation or negotiation—that trades retirement value for other assets, such as home equity or cash.

Each approach has advantages and potential tax implications, making it important to proceed with experienced legal and financial guidance.

Why Professional Guidance Matters

Dividing retirement assets is rarely simple. Every plan has its own rules, tax considerations can be significant, and the impact on your long-term financial health is substantial.

At BTB, we help clients:

Understand how Michigan law applies to their specific retirement benefits
Strategize ways to protect premarital or separate assets
Navigate QDRO and DRO requirements
Address the financial implications of dividing complex assets
Make informed decisions about settlements that support their future stability

Talk With a Michigan Divorce Attorney About Your Retirement Rights

Your retirement represents years of effort—and the decisions made during divorce can shape your financial future for decades. If you're facing a divorce or have questions about how your retirement accounts or pension may be handled, speaking with an experienced attorney early in the process is key.

Family LawAnne TuinstraDecember 10, 2025