Understanding How to Divide a 401(k) in Divorce
Dividing a retirement account like the Knowbe4, Inc.. 401(k) Profit Sharing Plan & Trust during divorce isn’t automatic. You need a special court order known as a Qualified Domestic Relations Order (QDRO) to properly divide the account without tax penalties or early withdrawal fees. A QDRO tells the plan administrator how to assign a portion of one spouse’s retirement to the other spouse (commonly called the “alternate payee”).
Depending on how the plan is structured, the alternate payee could receive a percentage of the account balance or a flat dollar amount. With 401(k) plans, like the Knowbe4, Inc.. 401(k) Profit Sharing Plan & Trust, several key components must be addressed in the QDRO to ensure it’s accepted and properly processed.
Plan-Specific Details for the Knowbe4, Inc.. 401(k) Profit Sharing Plan & Trust
Before preparing the QDRO, we need to understand specific details about this plan.
- Plan Name: Knowbe4, Inc.. 401(k) Profit Sharing Plan & Trust
- Sponsor: Knowbe4, Inc.. 401(k) profit sharing plan & trust
- Organization Type: Corporation
- Industry: General Business
- Effective Date: Unknown
- Plan Year: Unknown to Unknown
- Plan Number: Unknown
- EIN: Unknown
- Status: Active
- Plan Participants: Unknown
- Assets: Unknown
- Address: 33 N GARDEN AVE STE 1200
Even though some information is currently unknown (like the plan number and EIN), these are required during QDRO drafting and submission. At PeacockQDROs, we track down this information for our clients to make sure the QDRO package is complete and compliant.
QDROs Require Precision with 401(k) Plans
Unlike pensions with fixed monthly benefits, a 401(k) plan like the Knowbe4, Inc.. 401(k) Profit Sharing Plan & Trust is an account-based plan. The value can fluctuate with market conditions, contributions, and distributions. This means the language in the QDRO must be precise to ensure fair division.
Employee vs. Employer Contributions
Participants typically contribute a portion of their salary to the 401(k), and the employer may match a percentage. During divorce, both contributions can be split—but only the vested portion of employer contributions is available for division. The QDRO must clearly state whether it covers only the participant’s deferrals, employer matching contributions, or both.
If you are the alternate payee, you’re only entitled to the marital portion, which is generally calculated from the date of marriage to the date of separation or divorce. Be sure your QDRO specifies these dates and the formula used to calculate your share.
Understanding the Vesting Schedule
Many companies, including those in the general business sector like Knowbe4, Inc.., have vesting schedules for employer contributions. This means the participant must work a certain number of years to “own” the employer’s matched funds. Unvested amounts will not transfer under a QDRO. Your attorney or QDRO professional should work with the plan administrator to determine the total vested balance on the valuation date applicable to your divorce.
Handling 401(k) Loans
Another common feature in 401(k) accounts is participant loans. A key decision point is whether that loan balance is considered part of the account’s value for division. You also need to know who’s responsible for repayment—only the participant continues paying the loan post-division, and QDROs should make this clear.
Some QDROs exclude the loan balance from the payable portion to the alternate payee, while others reduce the alternate payee’s share accordingly. Be aware: the presence of a loan can lower the amount available for distribution, and poorly drafted QDROs can produce confusing or unfair results.
Roth vs. Traditional Balances
401(k) accounts may be split into two types: Traditional (pre-tax contributions) and Roth (after-tax contributions). The Knowbe4, Inc.. 401(k) Profit Sharing Plan & Trust may include both types, and the QDRO needs to differentiate between them. Roth funds should be transferred into a Roth account, and pre-tax funds into a traditional tax-deferred account. If they’re mixed, the alternate payee could face unintended tax problems.
Best Practices for Dividing the Knowbe4, Inc.. 401(k) Profit Sharing Plan & Trust
When drafting a QDRO for this specific plan, use the following best practices:
- Request the plan’s summary plan description (SPD) to confirm plan rules, including any restrictions or unique policies.
- Get the vesting schedule and loan report from the plan administrator.
- Clarify whether the division should apply to the account balance as of the date of separation, divorce judgment, or QDRO approval.
- Specify whether earnings or losses should be included from the date of division to the date of payment.
- Delineate between Roth and traditional account balances clearly in the QDRO.
Failing to include this level of detail can delay processing, create disputes, or even require the QDRO to be amended and re-approved by the court. At PeacockQDROs, we prevent these issues by handling every step, from drafting to final submission.
Why Work with PeacockQDROs?
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 (when the plan allows), court filing, submission to the plan administrator, and all necessary follow-up. 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. Want to learn how we work? Check out our QDRO services page.
Common Mistakes to Avoid in QDROs for 401(k) Plans
If you’re handling a QDRO yourself or hiring someone who’s not experienced, mistakes can cost you. See our list of common QDRO mistakes that include:
- Not distinguishing between vested vs. unvested funds
- Omitting plan-specific processing rules
- Failing to address loans properly
- Transferring Roth funds into taxable accounts
- Ignoring post-divorce gains or losses
How Long Does This Take?
The time it takes to get a QDRO finalized depends on several factors: how fast the plan administrator reviews drafts, whether pre-approval is offered, and how responsive your local court is. To get a realistic estimate, review our guide on the timing for QDRO completion.
Next Steps
If you’re divorcing and your spouse has a 401(k) through the Knowbe4, Inc.. 401(k) Profit Sharing Plan & Trust, don’t try to do this without the right guidance. A properly drafted QDRO is necessary to protect your award and avoid future legal and financial headaches.
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 Knowbe4, Inc.. 401(k) Profit Sharing Plan & Trust, 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.