Doing Divorce Right By Chief PeaceKeeper™ Scott Levin

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

• Scott Levin Divorce Mediation Attorney

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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
scottlevinmediation@gmail.com
858-255-1321
San Diego Divorce Mediation & Family Law
www.SanDiegoFamilyLawyer.net




Speaker 1:

Scott Levin MD. Hi everybody, this is Scott Levin. I am a family law attorney who practices exclusively in mediation by choice here in Southern California. I go by the moniker Chief Peacekeeper and I am joined by my good friend Lori Itkin. Hi, lori, how are you?

Speaker 2:

Lori Itkin MD. Hey, Scott, I'm doing great. Thank you.

Speaker 1:

Good Lori, do you mind giving us a brief introduction for our viewers and give them some understanding of your background and expertise? Sure.

Speaker 2:

So I'm a certified divorce financial analyst it's also known as a CDFA and we CDFAs have specialized training and education and continuing education every year on the financial and tax impacts of divorce. And hey, when you're getting a divorce, most of it's about the money, isn't it? So I practice for my CDFA work. I practice mostly with California. I've worked on over 140 divorce cases in California already, and just pretty busy. My plate's always full. And I'm a wealth manager, a financial advisor for clients, and I also do that nationwide.

Speaker 1:

Wonderful and Lori has the best and most incredible reputation, literally. I have friends telling me you need to know Lori Itkin. I say no Lori Itkin.

Speaker 2:

Of course I know Lori already, but just as Well, I know you too now, Scott, so that's great yeah thank you.

Speaker 1:

So, Lori, a big issue in divorce is our retirement plans, defined contribution plans. So those include 401Ks, 403Bs, a whole slew of plans, and people want to understand during a divorce how do we value that asset? How do you look at a 401K? What portion of a 401K is the separate property of the person who earned it and what portion is the community property? Especially when I get this all the time in mediation hey, I had this 401k prior to marriage, isn't it just mine? Well, you had it prior to marriage, but there was also a period of time that you earned and added to that 401k during the marriage. And then, of course, there's been a period of time since the date of separation, which we won't get into, but that oh, we'll get into it.

Speaker 1:

Okay, good, Okay, so we'll get so that after the date of separation that a couple identifies, then it goes back to earning a portion of that 401k as separate. So you know, as a certified divorce financial analyst, how do you help people understand what they're entitled to and what the real figures are in circumstances like that?

Speaker 2:

Right, well, thank you. Yeah, it's a great issue. And when we talk about 401k, it may also be a TSP or a 403b. It's not going to be a pension. It's going to be what called a defined contribution plan, where you pull your statement and you go ah, I have $247,000 as of December of 2019. Okay, so, yes. So there's a lot of misconceptions over this. And it's also remember California.

Speaker 2:

We have a lot of unique ways to deal with divorce math in California. I like to say Divorce math is not like regular math. So let's take the normal situation. I like to put things in context. Okay, you have wife, who's the primary 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. The 401k is $300,000. Now, if you do nothing, the default is going to be you split that thing 50-50. Assuming it's all community property. It's very rarely all community property, except if you've had a very long marriage.

Speaker 2:

But more and more we're seeing people getting divorced. This is their second marriage or they married later in life. So let's say her, her 401k is worth 300,000. Now let's say and she hopes she has this we would need to see the balance of her 401k around the date of marriage. Can't find it? We got a problem right, but I help solve problems. There's ways to do estimates, especially if the couple is in mediation. I cannot stress this enough because in mediation we can look at estimates, we can be reasonable people right.

Speaker 2:

So let's just say we think she had $100,000 10 years ago when they got married. Now the growth of her separate property of that $100,000 is also her separate property. But any contributions she made plus any company match that was made during the marriage is community property, including the growth on that community property. And then, as you said, we have couples that have been separated for a long time, six months, three years. I mean I even have, I'm even working with a couple that's been separated eight years. And so, as you implied, any contributions and company match and growth on that after the date of separation is your separate property. And this is why couples often argue well, what is the date of separation? Well, she moved out when we got back together. Oh, we haven't slept together in three years. You know, I hear it all, you hear it all the date of separation.

Speaker 1:

We could do another video on that, but anyway, so you're saying that there is a way, when someone has $100,000 in their 401k before the marriage, that there's a way to value what that $100,000 grew to, to separate that growth out as a separate portion?

Speaker 2:

separate that growth out as a separate portion? Yes, there is. Now the big question is how much does the couple want to pay to get that answer? Pay meaning the time.

Speaker 2:

For someone like me, another CDFA or a forensic accountant, we can do the old school route, which is the accurate route, and ask to see every monthly statement or maybe every quarterly statement, all those 10 years of marriage plus age. Okay, sometimes it's hard to get those records, 50% of the cases at least. You can't even get all those records 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 I estimate, can I look at, maybe, how your 401k has is allocated now, maybe was allocated then, and I can.

Speaker 2:

I can figure out pretty quickly. Is this person? If this person was a passive investor and it was just in a target date fund and they never changed it, very easy to do. If this is a person who was day trading and their 401k moving, I can. There it won't be great. So what I love to do in my memos is do a range of estimates. If we assume X, y, z, and I believe 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 fall out of mediation and you really want to get to the dollar on this 401k, then you are going to have to go the forensic accounting route because if you cannot prove your separate property, it is presumed to be community property, divided 50-50.

Speaker 1:

You know. That's really. I'm really glad you mentioned your reports, because I've read your reports before, obviously, and not only are they super easily, you know the way that you write. Even I can understand, my clients can understand, you know, and we're dealing with people from all walks of life, so it's the time that you put in is pretty amazing to simplifying. But I also love what you do when you you'll give like the two ranges or the three ranges or whatever, and you'll you'll lay out your case for why you know why this is reasonable, and then you'll say if we choose the median, you know it would be, you know the community property of interest would be X, and I always love that because it gets people in mediation, you know, motivated, you know for the middle, which is, you know, the fair and even way to go. So I really love. I just want to comment, I love how you write those and how you do that.

Speaker 2:

Thank you. I mean you want to know what am I leaving on the table, what am I giving up and if I can make that number of uncertainty small enough, I feel I've really delivered a great job and such a helpful role to the couple and the mediator. But there will be cases where I can't do it. I, you know, and I try to use different methodologies to get into my estimate. I mean, I have a back test portfolio analyzer, which is a fancy way of saying if you were in the S&P 500 at 70% that and 30% in bonds, how would it have performed over time? Or I'd use that and I also will do. I'll take whatever statements you have and I'll build a spreadsheet and make linear estimates. So there's different ways to get at it. But now this is where the price can range. So if people want quick and dirty from me, maybe I can do it in two hours Again. So on these things, I've ranged anywhere from two to 10 hours depending on how many statements we're looking at.

Speaker 1:

Well, it's well worth it, I will say. I mean, people want you want to understand what you know, like you said, what you're leaving on the table, what the numbers really look like within reason, and so that you can make an educated decision when you're deciding whether you know to give something up or to take your percentage or to make a trade off. It's just really important. And you know, one thing that people don't understand is that these you know equations and math and and finances are not taught typically in law school and finances are not taught typically in law school. I don't remember those classes. A lot of lawyers are just missing that whole side of things, and that's why bringing in a certified divorce financial analyst, a CDFA, like Lori Yipkin is just a really, really smart thing to do for not in the scope of things, not a whole lot of money. So do yourself a favor, lori. Where can people find you?

Speaker 2:

The best way to find me is my website, which is theoptionsladycom.

Speaker 1:

Theoptionsladycom. Great Well, thank you so much and we really appreciate you joining us and give I mean, she is really a very in-demand person, everybody so I'm really blessed to have you here today and I look forward to continuing to work with you and watching. Yeah, you continue to succeed. So thank you thank you, scott.

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