Splitting Retirement Accounts During A Divorce

One of the many reasons a divorce is such a significant event in your life is because it questions your future. Accumulating and protecting assets is a method for securing a future. Regardless of your long-term goals, you must be in the right financial position to pursue them. Think about how much a divorce calls this into question. Someone middle-aged, for instance, begins to look at the equity they have in their home and how much they’ve contributed to their retirement account. How much of this can I hold onto? Am I going to have to start over? Our Fairfax divorce lawyers can help you answer all of these questions as well as provide exceptional legal representation through the divorce proceedings.

The Future of Your Retirement Account

Before we explain how you can successfully divide a retirement account, it is essential to highlight that you should come to your initial consultation prepared. 

  • What kind of retirement account do you have? Do you have a pension, a 401(k), or a 403(b) account? Perhaps you have a pension with the federal government under FERS or CSRS or a military pension, in addition to a Thrift Savings Plan (TSP)?
  • How many retirement accounts do you have?
  • How much money is in them?
  • How have you been making contributions?

We bring this up because family law attorneys like the ones at Select Law Partners, PLLC, are eager to help and guide you through the divorce process. When you arrive and ask what will happen to your retirement account, attorneys can give you a general overview of how they are treated. But your attorney will need more information if you want relevant advice directly impacting you. 

One of the things they may bring up is a qualified domestic relations order (QDRO), sometimes called a Court Order Acceptable for Processing (i.e. a “COAP,” especially in cases involving federal pensions) or a Military Retired Pay Order (i.e. cases involving military pensions). Due to the penalties and regulations surrounding most retirement plans, some people assume that they cannot be divided. A QDRO is an Order that allows you or your spouse to keep a portion of your retirement plan. Though they have other applications, they are frequently used to divide retirement plans for divorcing couples. 

If your spouse created the retirement plan through their employer, you would become the “alternate payee.” When the funds are removed from the retirement plan, there are no automatic 10% tax penalties for withdrawing the money before you’re 59.5 years old if the money gets rolled into another retirement account. 

How Does It Get Divided?

In Virginia, your assets (including your retirement account) will be subject to equitable distribution—which does not automatically equate to 50/50. Among a long list of factors, the court examines the following:

  • Your debts and liabilities 
  • The contributions that were made and by whom
  • Your marital property 
  • How the assets were acquired 
  • The length of the marriage
  • The age and health of both people

Your retirement plan will likely be marital property, and the court could give more credence to the person who built it up (again, equitable means fair as opposed to even). 

Select Law Partners, PLLC, serves clients in North Carolina and Virginia. Both states have equitable distribution laws. Because most family law cases will never require you to go to court, our attorneys will work with you and your spouse’s attorney to divide your assets fairly, including your retirement plan. Contact our offices today to schedule your consultation

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Matt Kurylo

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