Dividing a 401K in Divorce: CDFA Expert Advice from Laurie Itkin & Scott Levin

In this episode, Attorney, Mediator, CDFA, and Chief PeaceKeeper™ Scott Levin sits down with Financial Advisor and Certified Divorce Financial Analyst Laurie Itkin to break down one of the most complex issues in divorce: how to divide a 401(k).

401(k)s present a unique set of challenges in divorce. These retirement assets often contain both community and separate property, grow in value over time, and require a Qualified Domestic Relations Order (QDRO) to divide properly. So how do you determine what portion is marital? How is appreciation handled? What’s the smartest, most tax-efficient way to divide the funds?

👉 Whether you're going through a divorce, advising clients, or simply want to understand the financial intricacies of retirement accounts in family law, this conversation provides essential guidance and real-world clarity.

👩‍💼 About Our Guest – Laurie Itkin

Laurie Itkin is a financial advisor, wealth manager, and CDFA®, and author of the Amazon best-seller Every Woman Should Know Her Options: Invest Your Way to Financial Empowerment. Named one of Investopedia’s Top 100 Financial Advisors, Laurie specializes in divorce-related financial planning through her firm The Options Lady.

🔗 Learn more at: https://www.theoptionslady.com/

🧑‍⚖️ About Scott Levin, Chief PeaceKeeper™

Scott Levin is a Certified Divorce Financial Analyst, full-time mediator, and family law attorney serving clients throughout California. Founder of San Diego Divorce Mediation & Family Law, Scott leads couples toward informed, respectful divorce solutions that protect both finances and relationships.

📍 Areas We Serve:

Kensington, La Jolla, Encinitas, Carlsbad, Rancho Santa Fe, Solana Beach, Point Loma, Poway, Del Mar, Santaluz, Coronado, Scripps Ranch, Sabre Springs, Rancho Peñasquitos, Torrey Pines, Bankers Hill — and throughout California.

🌐 https://sandiegofamilylawyer.net/

📲 Connect on Social Media:
 • Facebook: ChiefPeaceKeeper
• Instagram: @SanDiegoDivorceMediation
• LinkedIn: San Diego Divorce Mediation & Family Law

📝 Read the full transcript:
 Transcript – How to Divide a 401(k) During Divorce

Thanks for listening and I hope you'll continue to learn more about how you can peacefully divorce.

As a divorce mediation attorney in California, Scott Levin helps couples figure out the settlement terms and draft enforceable settlement agreements so they can divorce fairly without needing to go to court. Obtain closure peacefully through an amicable divorce. process that protects families and kids.

Visit San Diego Divorce Mediation for more information and to learn more about our mission to help divorcing couples make informed decisions and fair agreements through mediation or book a free virtual consultation.

Scott Levin, attorney, mediator, CDFA®
Chief PeaceKeeper
[e-mail]
858-255-1321
San Diego Divorce Mediation & Family Law
www.SanDiegoFamilyLawyer.net

Episode Transcript

Speaker 1 (00:00):
Scott Levin MD.
Hi everybody, this is ScottLevin.
I am a family law attorney whopractices exclusively in
mediation by choice here inSouthern California.
I go by the moniker ChiefPeacekeeper and I am joined by
my good friend Lori Itkin.
Hi, lori, how are you?

Speaker 2 (00:21):
Lori Itkin MD.
Hey, Scott, I'm doing great.
Thank you.

Speaker 1 (00:24):
Good Lori, do you mind giving us a brief
introduction for our viewers andgive them some understanding of
your background and expertise?
Sure.

Speaker 2 (00:34):
So I'm a certified divorce financial analyst it's
also known as a CDFA and weCDFAs have specialized training
and education and continuingeducation every year on the
financial and tax impacts ofdivorce.
And hey, when you're getting adivorce, most of it's about the
money, isn't it?

(00:54):
So I practice for my CDFA work.
I practice mostly withCalifornia.
I've worked on over 140 divorcecases in California already,
and just pretty busy.
My plate's always full.
And I'm a wealth manager, afinancial advisor for clients,

(01:14):
and I also do that nationwide.

Speaker 1 (01:17):
Wonderful and Lori has the best and most incredible
reputation, literally.
I have friends telling me youneed to know Lori Itkin.
I say no Lori Itkin.

Speaker 2 (01:28):
Of course I know Lori already, but just as Well, I
know you too now, Scott, sothat's great yeah thank you.

Speaker 1 (01:36):
So, Lori, a big issue in divorce is our retirement
plans, defined contributionplans.
So those include 401Ks, 403Bs,a whole slew of plans, and
people want to understand duringa divorce how do we value that

(01:57):
asset?
How do you look at a 401K?
What portion of a 401K is theseparate property of the person
who earned it and what portionis the community property?
Especially when I get this allthe time in mediation hey, I had
this 401k prior to marriage,isn't it just mine?

(02:19):
Well, you had it prior tomarriage, but there was also a
period of time that you earnedand added to that 401k during
the marriage.
And then, of course, there'sbeen a period of time since the
date of separation, which wewon't get into, but that oh,
we'll get into it.
Okay, good, Okay, so we'll getso that after the date of
separation that a coupleidentifies, then it goes back to

(02:44):
earning a portion of that 401kas separate.
So you know, as a certifieddivorce financial analyst, how
do you help people understandwhat they're entitled to and
what the real figures are incircumstances like that?

Speaker 2 (03:01):
Right, well, thank you.
Yeah, it's a great issue.
And when we talk about 401k, itmay also be a TSP or a 403b.
It's not going to be a pension.
It's going to be what called adefined contribution plan, where
you pull your statement and yougo ah, I have $247,000 as of
December of 2019.

(03:22):
Okay, so, yes.
So there's a lot ofmisconceptions over this.
And it's also rememberCalifornia.
We have a lot of unique ways todeal with divorce math in
California.
I like to say Divorce math isnot like regular math.
So let's take the normalsituation.

(03:44):
I like to put things in context.
Okay, you have wife, who's theprimary breadwinner.
She makes more than the husband.
She has a 401k that's worth$300,000.
And let's say he has an IRA.
You know what?
I'm not going to complicate it,let's just focus on hers.
He's got a retirement plan too,but they've been married 10
years.

(04:05):
The 401k is $300,000.
Now, if you do nothing, thedefault is going to be you split
that thing 50-50.
Assuming it's all communityproperty.
It's very rarely all communityproperty, except if you've had a
very long marriage.

(04:25):
But more and more we're seeingpeople getting divorced.
This is their second marriageor they married later in life.
So let's say her, her 401k isworth 300,000.
Now let's say and she hopes shehas this we would need to see
the balance of her 401k aroundthe date of marriage.

(04:47):
Can't find it?
We got a problem right, but Ihelp solve problems.
There's ways to do estimates,especially if the couple is in
mediation.
I cannot stress this enoughbecause in mediation we can look
at estimates, we can bereasonable people right.
So let's just say we think shehad $100,000 10 years ago when

(05:11):
they got married.
Now the growth of her separateproperty of that $100,000 is
also her separate property.
But any contributions she madeplus any company match that was
made during the marriage iscommunity property, including
the growth on that communityproperty.
And then, as you said, we havecouples that have been separated

(05:34):
for a long time, six months,three years.
I mean I even have, I'm evenworking with a couple that's
been separated eight years.
And so, as you implied, anycontributions and company match
and growth on that after thedate of separation is your

(05:56):
separate property.
And this is why couples oftenargue well, what is the date of
separation?
Well, she moved out when we gotback together.
Oh, we haven't slept togetherin three years.
You know, I hear it all, youhear it all the date of
separation.

Speaker 1 (06:15):
We could do another video on that, but anyway, so
you're saying that there is away, when someone has $100,000
in their 401k before themarriage, that there's a way to
value what that $100,000 grew to, to separate that growth out as

(06:36):
a separate portion?

Speaker 2 (06:42):
separate that growth out as a separate portion?
Yes, there is.
Now the big question is howmuch does the couple want to pay
to get that answer?
Pay meaning the time.
For someone like me, anotherCDFA or a forensic accountant,
we can do the old school route,which is the accurate route, and
ask to see every monthlystatement or maybe every
quarterly statement, all those10 years of marriage plus age.

(07:04):
Okay, sometimes it's hard toget those records, 50% of the
cases at least.
You can't even get all thoserecords because it's so long ago
.
So what we can do is sometimes,though, people say, well, I had
this or you know we can.
Then the couple.
I can say to the couple Can Iestimate, can I look at, maybe,
how your 401k has is allocatednow, maybe was allocated then,

(07:28):
and I can.
I can figure out pretty quickly.
Is this person?
If this person was a passiveinvestor and it was just in a
target date fund and they neverchanged it, very easy to do.
If this is a person who was daytrading and their 401k moving,
I can.
There it won't be great.
So what I love to do in mymemos is do a range of estimates

(07:50):
.
If we assume X, y, z, and Ibelieve these are reasonable
assumptions.
It could be X, y, z.
You're really fighting over$40,000.
I mean, are you fighting over$40,000 or are you fighting over
$400,000?
That is the beauty of this.
And mediation.
Now, if you are going to fallout of mediation and you really
want to get to the dollar onthis 401k, then you are going to

(08:15):
have to go the forensicaccounting route because if you
cannot prove your separateproperty, it is presumed to be
community property, divided50-50.

Speaker 1 (08:26):
You know.
That's really.
I'm really glad you mentionedyour reports, because I've read
your reports before, obviously,and not only are they super
easily, you know the way thatyou write.
Even I can understand, myclients can understand, you know
, and we're dealing with peoplefrom all walks of life, so it's

(08:47):
the time that you put in ispretty amazing to simplifying.
But I also love what you dowhen you you'll give like the
two ranges or the three rangesor whatever, and you'll you'll
lay out your case for why youknow why this is reasonable, and
then you'll say if we choosethe median, you know it would be
, you know the communityproperty of interest would be X,

(09:08):
and I always love that becauseit gets people in mediation, you
know, motivated, you know forthe middle, which is, you know,
the fair and even way to go.
So I really love.
I just want to comment, I lovehow you write those and how you
do that.

Speaker 2 (09:23):
Thank you.
I mean you want to know what amI leaving on the table, what am
I giving up and if I can makethat number of uncertainty small
enough, I feel I've reallydelivered a great job and such a
helpful role to the couple andthe mediator.
But there will be cases where Ican't do it.

(09:45):
I, you know, and I try to usedifferent methodologies to get
into my estimate.
I mean, I have a back testportfolio analyzer, which is a
fancy way of saying if you werein the S&P 500 at 70% that and
30% in bonds, how would it haveperformed over time?
Or I'd use that and I also willdo.

(10:06):
I'll take whatever statementsyou have and I'll build a
spreadsheet and make linearestimates.
So there's different ways toget at it.
But now this is where the pricecan range.
So if people want quick anddirty from me, maybe I can do it
in two hours Again.
So on these things, I've rangedanywhere from two to 10 hours

(10:27):
depending on how many statementswe're looking at.

Speaker 1 (10:31):
Well, it's well worth it, I will say.
I mean, people want you want tounderstand what you know, like
you said, what you're leaving onthe table, what the numbers
really look like within reason,and so that you can make an
educated decision when you'redeciding whether you know to
give something up or to takeyour percentage or to make a

(10:53):
trade off.
It's just really important.
And you know, one thing thatpeople don't understand is that
these you know equations andmath and and finances are not
taught typically in law schooland finances are not taught
typically in law school.
I don't remember those classes.
A lot of lawyers are justmissing that whole side of
things, and that's why bringingin a certified divorce financial

(11:16):
analyst, a CDFA, like LoriYipkin is just a really, really
smart thing to do for not in thescope of things, not a whole
lot of money.
So do yourself a favor, lori.
Where can people find you?

Speaker 2 (11:36):
The best way to find me is my website, which is
theoptionsladycom.

Speaker 1 (11:39):
Theoptionsladycom.
Great Well, thank you so muchand we really appreciate you
joining us and give I mean, sheis really a very in-demand
person, everybody so I'm reallyblessed to have you here today
and I look forward to continuingto work with you and watching.
Yeah, you continue to succeed.
So thank you thank you, scott.