What Married Couples Should Know about Their 401(k)s
Married couples each have their own 401(k), but many retirement decisions work best when they’re made together. Coordinating employer matching contributions, reviewing beneficiary designations, and understanding what happens to a 401(k) after death or divorce may help couples make the most of their retirement savings and avoid costly mistakes.
Takeaways
- Each spouse owns their own 401(k), but some retirement decisions work best when a couple makes them together.
- Directing contributions to the account with the stronger employer match first may help a couple capture more of their available match.
- Many 401(k) plans require a spouse to be the primary beneficiary unless the spouse provides written consent to name someone else.
- A 401(k) is generally divided through a Qualified Domestic Relations Order (QDRO) during a divorce.
- Reviewing employer matches, beneficiary forms, and account allocations together each year may help keep retirement plans on track.
Why Married Couples Should Talk about Their 401(k)s
You and your spouse probably talk about the mortgage, the car payment, and what’s for dinner.
But you may not spend much time talking about your 401(k)s.
That silence can have consequences.
Each of you likely has your own account, your own employer, and your own retirement plan.
But some of the biggest retirement decisions – such as employer matching contributions, beneficiary designations, and what happens after death or divorce – may affect both of you.
Looking at your retirement savings as a household, rather than as two separate accounts, may help you avoid costly mistakes and make better use of the money you’re already saving.
Let’s break it down.
Married Couples Are Leaving 401(k) Match Money on the Table
Close to 1 in 5 couples fail to arrange their retirement contributions in a way that captures the most employer match available to them, leaving an average of $757 a year on the table. [1]
That’s not because they’re confused about how their plans work.
Researchers found many couples had simply never considered that coordinating their employer match could help them. [1]
Here’s the good news: This one is fixable in a single conversation.
Coordinating means directing your dollars to the account with the better match first, instead of each spouse contributing on their own.
Not all matches are equal.
One spouse’s employer might match dollar-for-dollar. The other’s might match 50 cents per dollar.
Say you both earn $60,000. Your employer matches 100% of your first 3% – put in $1,800, get $1,800 back. Your spouse’s employer matches 50% up to 6% – they’d have to put in $3,600 to get that same $1,800.
Same match. Double the contribution.
If money is tight and you can’t both max out your 401k(s), the first dollars should go where the match is stronger.
The missed match adds up to about 13% of everything the couple sets aside for retirement that year. And it doesn’t fix itself. [1]
More than 2 in 5 couples who leave match money behind still have the same gap 7 years later. [1]
Does Your Spouse Have to Be Your 401(k) Beneficiary?
In many plans, yes. A number of 401(k) plans require your spouse to be your primary beneficiary unless your spouse gives written consent to name someone else. [2]
Your 401(k) beneficiary form is a legal contract, and it controls who gets the money – not your will, not your trust, not what you told your family.
Because rules vary by plan, check your plan’s summary plan description or ask your plan administrator what yours requires.
Note: A divorce decree does not automatically remove an ex-spouse from your beneficiary form. You have to update it yourself.
What Happens to a 401(k) in a Divorce?
The 401(k) contributions made during a marriage are generally considered marital property, which means they may be split between the former spouses.
But a 401(k) can’t be divided like a bank account. Before any money is paid out, a Qualified Domestic Relations Order (QDRO) has to be filed. [3]
What Is a QDRO?
A QDRO is a legal order that directs a 401(k) plan to pay part of the account to a former spouse as part of a divorce. [3]
When a former spouse receives money directly from a 401(k) through a QDRO, the usual 10% early withdrawal penalty does not apply, even if they’re under age 59½. [4] The money is generally taxed as ordinary income to the person who receives it. [4]
The most common mistake is treating the QDRO as an afterthought. Once a divorce is final, fixing mistakes gets harder, and collecting what you’re owed can get complicated. [3]
This is legal territory, not do-it-yourself territory. If you’re facing divorce, we encourage you to work with a QDRO attorney, and talk to a financial professional about getting your retirement plan back on track.
What Happens to a 401(k) When Your Spouse Dies?
A surviving spouse who is the sole beneficiary has more options than any other beneficiary.
If your spouse’s death occurred in 2020 or later and you’re the sole beneficiary, you may keep the account as an inherited account or roll it into your own IRA. [5]
Those options matter. A surviving spouse can:
- Roll it into their own IRA or 401(k). This gives the money more time to grow, and regular retirement rules then apply.
- Keep it as an inherited account. Depending on when your spouse passed, you may be able to delay distributions, take them over your own life expectancy, or follow the 10-year rule. [5]
- Take a lump sum from the inherited account. No early withdrawal penalty applies even if you’re under 59½, but the money is taxed as ordinary income and could push you into a higher bracket. [5]
You may also be treated as having made the account your own simply by rolling it over or by not taking a required distribution as a beneficiary. [6]
What Should a Surviving Spouse Do First?
Contact your late spouse’s employer or plan administrator to claim the benefit. [5]
Then, before moving any money, talk to a financial professional. A quick decision to cash out could trigger a large, avoidable tax bill.
What Should Married Couples Review about Their 401(k)s Each Year?
Sit down once a year and check 4 things together:
- Are you each getting your full employer match, and are your dollars going to the better match first?
- Does your household allocation still make sense across both accounts?
- Are your beneficiary forms current on both accounts?
- Has anything major changed – a new job, a new baby, a move?
None of these takes long. Together, they may keep thousands of dollars working for you instead of slipping away.
If you have questions about your 401(k) or need help, we’re here for you.
Book a complimentary 15-minute 401(k) Strategy Session with one of our advisors.
Sources
[1] Center for Retirement Research at Boston College. Do Married Couples Coordinate Their Retirement Savings? June 2, 2026. August 2026. https://crr.bc.edu/do-married-couples-coordinate-their-retirement-savings/
[2] Internal Revenue Service. Retirement Topics – Death of Spouse. U.S. Department of the Treasury. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-death-of-spouse
[3] U.S. Department of Labor, Employee Benefits Security Administration. QDROs: The Division of Retirement Benefits Through Qualified Domestic Relations Orders. https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/qdros.pdf
[4] Internal Revenue Service. Retirement Topics – QDRO: Qualified Domestic Relations Order. U.S. Department of the Treasury. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-qdro-qualified-domestic-relations-order
[5] Internal Revenue Service. Retirement Topics – Beneficiary. U.S. Department of the Treasury. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary
[6] Internal Revenue Service. Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs). U.S. Department of the Treasury. https://www.irs.gov/publications/p590b
