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How are retirement assets divided in divorce?

When getting divorced, retirement savings are some of the most valuable assets a couple owns. They are often overlooked, especially by younger couples who are decades away from retiring. But these benefits should be divided properly to ensure that both spouses can stay on track for a financially secure retirement.

Funds added during marriage are divisible

It ultimately doesn’t matter if a pension or other retirement plan only lists one spouse’s name. The portion of funds acquired during the marriage is considered marital property, and therefore, divisible.

Let’s say that a husband worked at his job for three years prior to getting married. He continued to work that job for the duration of the couple’s seven-year marriage. His employer-sponsored retirement plan accumulated 10 years’ worth of assets. Three of those years belong solely to the husband, but the other seven are subject to division.

Retirement asset division isn’t automatic in divorce

Retirement funds are divisible in divorce, but a divorce alone does not automatically trigger this process. To divide the assets, you’ll need to file what is known as a qualified domestic relations order (QDRO). This is a complex process that should be done with the help of an experienced family law attorney to ensure there are no errors or omissions.

If a given account is only in one spouse’s name, the administrator of the plan will only disburse funds to the account-holding spouse. A QDRO establishes proof that the other spouse is entitled to a certain portion of the benefits and allows the administrator to list the spouse as an alternate payee.

Discuss retirement assets with your own attorney

Next to the marital residence, retirement funds may be the largest asset most couples own. Therefore, please be sure to discuss this aspect of your marital estate with your attorney early in the divorce process.