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Can you keep your retirement plan through a divorce?

On Behalf of | Nov 16, 2022 | Property Division |

You’re getting divorced and you have a retirement plan that you get through your employer. You haven’t retired yet, so you don’t consider this a marital asset. You don’t even really think of it as something you own, but just a plan that your employers put together. Someday, perhaps years or decades in the future, you’ll retire and access that plan.

However, your spouse tells you that it is a marital asset because you’ve earned the plan during the marriage. They claim that this means it should go to them, as it is supposed to be shared jointly, and they were planning to retire based on the value of that account. They are worried that they can’t retire without it. Who is right?

You may have to split the account

If your ex believes that they are entitled to the entire retirement plan, then they are incorrect. But they do have a point in stating that it is a marital asset since you earned it during your marriage. It is just a different type of benefit than your standard income, but it is still a financial benefit that was earned. It has a true value and does need to be split up with the rest of your shared assets, which can be done with a Qualified Domestic Relations Order.

What the court will likely do is look at the percentage of the plan that you earned while you were married. Your ex may be entitled to half of that amount, but that doesn’t necessarily mean they get half of the entire retirement plan.

For instance, say that the plan pays $5,000 a month after you retire. If you were married the entire time you earned that plan, you and your ex may each get $2,500 a month.

But if you were only married for a portion of the time, that can factor in. Perhaps you earned half of the pension during your marriage and half of it before and after you were married. This means that your former spouse should get 50% of their half of the monthly payment, which is just 25% of the total payment. In the above example, it would be $1,250 per month.

Moving forward

Complex financial assets like this can certainly lead to disputes during a divorce. It’s very important for you to understand all the legal options you have and the steps you’ll need to take.