Dividing Employee and Employer Contributions
401(k) plans typically include both the employee’s salary deferrals and the employer’s matching or discretionary contributions. The QDRO must clearly state how both types of contributions are to be divided. In many cases, divorcing spouses agree to split the marital portion of the account based on either a fixed percentage or a specific dollar amount as of a certain date.
Importantly, employer contributions may be subject to a vesting schedule. If the employee isn’t 100% vested in the employer’s contributions at the time of divorce, the alternate payee (non-employee spouse) generally can’t access the unvested portion. Those unvested funds eventually revert back to the plan sponsor if the participant terminates employment without qualifying for full vesting.

