If you have the money and can afford to do so, the answer is usually Yes. Why? Regardless where the money ends up in your marital estate (i.e. a retirement account, a checking account or somewhere else), the money is an asset of the marital estate subject to property division. So, it usually makes sense to continue to contribute to your retirement account even if you are getting a divorce. Furthermore if you are contributing to a simplified employee pension (SEP), you get the benefit of the tax deduction too. So, why not contribute vs. stop contributing if you can afford it?

It is worthy to note:

  1. Any contributions you make to a retirement account will have what is referred to as tax attributes associated to those contributions. So, when it comes time to divide up your assets you will need to address the tax impact of your contributions. 
  2. Most people think they have to transfer monies to their spouse from their SEP or other retirement account. This is not always the case and is not always the wisest decision either to “fund” your divorce from your retirement account.
  3. If you transfer monies from your SEP to your spouse be sure to do it through a “Trustee to Trustee” transfer, not a direct transfer to avoid the tax liabilities associated to the agreed upon division of property. The Trustee to Trustee transfer is similar to saying make sure Fidelity talks to Charles Schwab and you nor your spouse ever touch the funds in the form of a check, etc. If you did you could have a tax liability on your hands. If you perform a Trustee to Trustee transfer then you will not have that issue as long as the divorce decree is supplied to the Institution as evidence as the reason for the transfer.

About the Author

Larry Smith CPA, MBA

Larry is a Founding Partner of Divorce Outcomes, a specialty professional services firm that analyzes, architects and negotiates all of the financial aspects of a divorce.

Since 2003, Larry has worked with divorcing parties as their fiduciary to design sophisticated divorcing strategies that enable clients to preserve and create wealth from their divorce. As a technical financial expert, he uncovers hidden tradable components through various analytical and architectural processes to arrive at desired outcomes. He is an alumni of KPMG and Andersen and has expertise in:

  • technical accounting, taxation, business consulting, risk management, M&A
  • forensic analysis, performance analytics
  • M&A, business valuations, divorce management, family equity transfers, multi-party negotiations, communications management
  • advanced process engineering, cognitive performance technologies

If You Have a Question

If you have a question, feel free to contact me at [email protected] or 617-680-5222. The call is free. I will spend 30–60 minutes with you. I will provide you an honest assessment as to where I think you are positioned in your divorce process or answer any questions you have. I may provide you some guidance, insight or advice that you can take with you as you wish. There is no obligation to move forward. The phone call is designed to ease your fears, provide you some options to pursue and a potential road to run on that can lead you down a path to achieve a successful outcome.

About Divorce Outcomes

Divorce Outcomes is a specialty services firm that helps people both domestically and internationally manage all of the financial decisions that arise in a divorce process. We are not attorneys. We are financial experts who partner with our clients as their personal financial advocates. We help our clients:

  • manage their divorce process
  • uncover hidden financial risks
  • architect divorce solutions
  • manage ever-changing negotiating positions
  • communicate complex financial matters
  • close the divorce process as soon as possible

Throughout the process we evaluate our clients’ current wealth-at-risk and architect desired outcomes to best preserve or create wealth.

Learn more about us at divorceoutcomes.com or review our blogs to gain a clearer understanding about our approach and how we maximize the financial outcomes for our clients.


This communication is for general informational purposes only which may or may not reflect the most current developments. It is not intended to constitute formal advice or a recommended course of action as every person’s situation is unique and different. The information here is not intended to be, and should not be, relied upon by the recipient to make a decision without professional guidance.

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