Introduction
Dividing retirement assets during divorce can feel daunting, especially when one spouse participates in a specific employer-sponsored plan like the Builders Firstsource 401(k) Savings Plan. Because 401(k) plans have rules that differ from pensions and IRAs, a special court order called a Qualified Domestic Relations Order (QDRO) is required to split plan benefits without triggering taxes or penalties. In this article, we’ll walk you through the critical issues involved in dividing the Builders Firstsource 401(k) Savings Plan in divorce—and how to do it right.
Plan-Specific Details for the Builders Firstsource 401(k) Savings Plan
Before dividing any retirement plan, it’s crucial to understand its structure. Here are the known details for the Builders Firstsource 401(k) Savings Plan, which can directly affect how you need to draft your QDRO:
- Plan Name: Builders Firstsource 401(k) Savings Plan
- Sponsor: Builders firstsource, Inc.
- Address: 7 Shattuck Road
- Plan Year: Unknown to Unknown
- Effective Date: Unknown
- Plan Number: Unknown
- EIN: Unknown
- Industry: General Business
- Organization Type: Corporation
- Status: Active
- Participants: Unknown
- Assets: Unknown
Even with a few unknowns, many of the general principles of dividing 401(k) plans apply to this plan. But you still need to follow certain plan-specific policies, which means contacting the plan administrator during the QDRO process is an essential step.
What Is a QDRO and Why Do You Need One?
A Qualified Domestic Relations Order (QDRO) is a legal order that allows a retirement plan to pay benefits to someone other than the participant—usually an ex-spouse—without penalty. Without a QDRO, the spouse would likely owe taxes and potential early withdrawal penalties on any distribution. QDROs are required for qualified retirement plans like the Builders Firstsource 401(k) Savings Plan.
Key Asset Division Issues in the Builders Firstsource 401(k) Savings Plan
Employee and Employer Contributions
When dividing a 401(k) plan, it’s not just the participant’s personal contributions that are up for division—employer contributions must be addressed too. With the Builders Firstsource 401(k) Savings Plan being employer-sponsored, it’s likely that Builders firstsource, Inc. makes matching or other discretionary contributions. A QDRO must clearly define what portion of both employee and employer contributions the alternate payee (usually, the ex-spouse) will receive.
Vesting Schedules and Forfeitures
401(k) plans often come with vesting schedules for employer contributions. That means even though matching contributions may show up in the plan, they may not yet belong to the employee. If the employee isn’t fully vested at the time of divorce, the QDRO should reflect that only the vested portion of employer contributions can be divided. Unvested funds may be forfeited if the participant leaves employment. This clause can be a key sticking point in how much the alternate payee ultimately receives.
Loan Balances and Who’s Responsible
If the participant has taken out a loan from the Builders Firstsource 401(k) Savings Plan, it can complicate plan division. Some QDROs exclude the loan from the division so the alternate payee doesn’t bear the repayment burden. Others divide the value of the account including or excluding the loan. It’s critical to identify if loans exist, and the QDRO should specify whether balances are part of the divisible asset or assigned solely to the employee spouse.
Roth vs. Traditional Contributions
Plans like the Builders Firstsource 401(k) Savings Plan may include both traditional (pre-tax) and Roth (after-tax) dollars. These account types have separate tax implications at distribution. Your QDRO should separate and label these amounts clearly. Failing to do so can result in confusion or unexpected tax treatment when the alternate payee receives their funds. If Roth dollars are involved, make sure the alternate payee’s new retirement account can accept Roth rollover funds.
QDRO Process for the Builders Firstsource 401(k) Savings Plan
The process of preparing and submitting a QDRO for the Builders Firstsource 401(k) Savings Plan generally includes the following steps:
- Obtain the plan’s QDRO procedures and required language guidelines from the plan administrator.
- Draft the QDRO to comply with both federal law and the specifics of the Builders Firstsource 401(k) Savings Plan.
- Send the draft to the plan administrator for preapproval, if allowed (recommended for faster processing).
- Submit the signed QDRO to the court for final approval and entry.
- Send the certified court-approved QDRO back to the plan administrator for final qualification.
Until the QDRO is accepted and implemented by the administrator, the alternate payee won’t receive any funds. Timing matters, especially if markets fluctuate or the participant is nearing retirement or termination.
Pitfalls to Avoid When Dividing the Builders Firstsource 401(k) Savings Plan
Some QDRO mistakes can be difficult, costly, and even irreversible. Avoid these common issues:
- Failing to distinguish between vested and unvested funds
- Incorrect treatment of outstanding loans
- Ignoring Roth/traditional account splits
- Delays in court submission or plan delivery
- Ambiguous division language (e.g., “50% of the account” vs. “as of date of divorce”)
To steer clear of these errors, check out our guide on common QDRO mistakes.
How Long It Takes and Why It Matters
The length of the QDRO process varies, but several factors can delay it. Learn more about the 5 key factors that affect QDRO timing. Everything from slow court paperwork to plan administrator response times can prolong the process. Starting early—ideally during the divorce itself—can save months down the road.
How PeacockQDROs Can Help
At PeacockQDROs, we’ve completed thousands of QDROs from start to finish. That means we don’t just draft the order and leave you to figure out the rest. We handle the drafting, preapproval (if applicable), court filing, submission, and follow-up with the plan administrator. That’s what sets us apart from firms that only prepare the document and hand it off to you.
We maintain near-perfect reviews and pride ourselves on a track record of doing things the right way. Whether you’re splitting traditional balances, Roth buckets, or dealing with an outstanding loan in the Builders Firstsource 401(k) Savings Plan, we’ll make sure your QDRO is done right.
Explore more about our QDRO services at PeacockQDROs.
Final Thoughts
The Builders Firstsource 401(k) Savings Plan is a typical corporate retirement plan, but every 401(k) has nuances—especially when it comes to dividing employer contributions, addressing vested versus unvested funds, and handling Roth components. Make sure your QDRO accounts for every relevant detail, and don’t risk guessing when it comes to something as important as your retirement future.
If your divorce was in California, New York, New Jersey, Connecticut, Kansas, Missouri, Iowa, or North Dakota, and you have questions about qualified domestic relations orders or dividing retirement assets like the Builders Firstsource 401(k) Savings Plan, contact PeacockQDROs. We specialize in QDROs and have successfully processed thousands of orders from start to finish.
Get the answers you need—explore our QDRO resources or reach out for personalized help if you’re in one of our service states.