When facing a divorce, your spouse will generally be entitled to some of your pension. In lieu of splitting your pension, try offering up your former home or another piece of comparable real estate. Real estate would be your best choice here. Second, if your spouse doesn’t have a retirement account that’s equal to your pension, consider other joint marital assets that you may be able to offer them instead. ![]() After all, think of the money you’ll save on lawyers alone. If it’s comparable to yours in value, it may behoove both of you just to call it even. First, find out if your soon-to-be ex has a retirement of their own. You may have a few bargaining chips on your side. If you have a pension and are in the midst of a divorce, don’t just fork over half blindly. Other states, including Alaska, Florida, Kentucky, Tennessee and South Dakota, allow spouses to opt into a community property system. There are only nine community property states – Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. But there are also a few community property states, where all marital property is simply divided 50/50. The vast majority of states are equitable distribution states. In equitable distribution states, assets (like your pension) are divided fairly – but this doesn’t necessarily mean 50/50. However, this depends on each state’s laws governing this subject. State Laws for Pensions in a DivorceĪ general rule of thumb when it comes to splitting pensions in divorce is that a spouse will receive half of what was earned during the marriage. It’s important to note that with a QDRO, the spouse is exempt from the tax ramifications of receiving their settlement. If your spouse is entitled to half or a portion of your pension, it would be withdrawn at the time of the divorce settlement and transferred into their own retirement account, usually an IRA. This is done via a court order called a qualified domestic relations order (QDRO). In order to gain access to a percentage of your pension, your spouse would have to specifically ask for their share at the time of the divorce – not at the time of your retirement. However, 1984 brought the Retirement Equity Act, which protects spousal benefits as they relate to pensions. This is the set of regulations that protect pension holders. If you have a pension, you’ve likely heard of the Employee Retirement Security Act of 1974 (ERISA). The Legalese Behind a Pension in a Divorce If you have a military or government pension, these are governed by their own specific set of rules and may not be subjected to the same rules when splitting your assets in a divorce. Remember that if you and your spouse signed a prenup protecting your pension, it’ll remain yours. ![]() The exact amount varies according to each state’s law and how much of the pension was earned during the marriage. For one, unless you are actively receiving a pension (and thus know the exact details of the payment amount and frequency), it can be difficult to pin down its exact value.Īdditionally, while a pension is usually considered a joint marital asset, that doesn’t mean it’s always split 50/50. However, the divisions of pensions in a divorce isn’t always a cut-and-dry situation. Usually, whatever is earned prior to the marriage remains the individual property, while what is earned during the marriage is considered a joint asset. How a Pension Is Handled During a DivorceĪ pension earned by one spouse is usually considered a joint asset, as are other retirement accounts, such as 401(k)s, 403(b)s and IRAs, though state laws govern the latter.
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