The portion of a retirement benefit earned during the marriage is generally marital property, even if the account is in one spouse's name. We help you identify that portion and choose the best way to divide it.
Different plans, different rules
- Defined contribution plans such as 401(k) and 403(b) accounts have a balance that can be traced and divided.
- Defined benefit pensions promise a future monthly payment. They are often divided by a formula that gives the other spouse a share of the marital portion of each payment, or they may be valued today and offset with other assets.
- IRAs are usually divided by a transfer incident to divorce.
- Federal, state and military plans follow their own rules and require specific types of orders.
The order matters
Many employer plans can only be divided by a Qualified Domestic Relations Order (QDRO) or a similar order approved by the plan. A poorly drafted order can cost money, delay payment, or lose valuable survivor benefits. We make sure the order matches the agreement and the plan's requirements.
Common questions about retirement assets
Will dividing my 401(k) trigger taxes or penalties?
A transfer made under a QDRO to a former spouse's own retirement account generally is not taxed at the time of transfer. Withdrawals are a different matter, so talk with a tax advisor before taking cash.
What about survivor benefits?
For pensions, whether the former spouse receives survivor benefits is a key decision that should be addressed in the agreement and the order.
Is the part I saved before marriage protected?
Contributions made before the marriage, and growth on them, are generally non-marital if they can be traced. Older statements can be very helpful.