Retirement Benefits and Divorce

For many couples, Pension plans, IRAs, 401(k)s and other retirement plans represent a significant portion of their net worth. These assets are addressed as marital property in divorce settlement agreements, to be divided fairly, but not necessarily equally, according to New York’s Equitable Distribution Law. Even if the retirement account was initiated prior to the marriage, the portion earned by a spouse during the marriage counts as marital property.

To divide the assets of an employer-sponsored plan such as a 401(k) or pension, the court produces a Qualified Domestic Relations Order, or QDRO, that allows a portion of the funds in a retirement account to be withdrawn without penalty and deposited into an account for the non-employee spouse’s (typically an IRA). To ensure that the settlement’s provisions can be executed as intended within the retirement plan rules, the QDRO should be submitted to the plan administrator well in advance of the final divorce decree.

Social Security retirement benefits may also be shared by a former spouse, provided:

• The marriage lasted 10 years or longer
• The ex is unmarried and age 62 or older
• The benefit that the ex—spouse is entitled to receive based on his or her own work is less than the benefit based on the higher earner’s work history. (The ex will get a combination of benefits that equals that higher amount.)

For questions about how divorce can impact your retirement resources, contact a divorce lawyer today.