Employee vs. Employer Contributions
In most 401(k) plans, there are two types of contributions: those made by the employee and those made by the employer. Employee contributions are always fully vested and therefore eligible for division in divorce. Employer contributions can be subject to a vesting schedule, which defines when the participant earns the right to keep those funds if they leave the company.
If the participant spouse is not fully vested in their employer match at the time of divorce, the former spouse (called the “Alternate Payee” in QDROs) may receive a lesser share than they expected. It’s critical that the QDRO clearly outlines whether the division includes only vested funds or all contributions.

