When you are divorcing, it’s natural to wonder what happens to retirement accounts. It can be a little discouraging to learn that any money you put into the account during your marriage is generally considered to be marital property, even if the account itself pre-dates the marriage.
However, as we’ve discussed before divorce always means making some financial sacrifices. You’re better off fairly and accurately reporting your assets. If a judge finds out that you’re trying to withhold information it will not reflect well for your case.
Minnesota law is going to entitle your spouse to a “just and equitable share” of your retirement accounts, even if the account is only in your name and even if you were the only one who was working at the time. If you did contribute to the plan prior to your marriage, then you may have a non-marital interest which should be stated so that the pre-marital portion is awarded solely to you.
Remember that “equitable” distribution does not mean “equal” distribution. You won’t always have to make a 50-50 split and you aren’t necessarily going to have to give up half of your current account balance. Having a good divorce attorney is helpful in this regard.
A good attorney can help you bring certain aspects of your situation to the attention of the court. At times, these can affect what might be “equitable” for you and your spouse.
If you are the spouse who expects to receive a portion of the retirement account you may be wondering how the money is distributed and when. Much depends on what sort of retirement account it is.
IRAs are fairly straightforward. You can roll over your portion of the account simply by presenting the divorce decree at the bank, or whatever document the plan requires.
A 401K requires an additional document called a Qualified Domestic Relations Order, or QDRO. This paperwork helps the financial advisor distribute the funds properly, without jeopardizing the protected tax status of the account. Pensions may also require a QDRO.
Given the nature of pensions, a QDRO will often express your award as a fraction rather than as a specific dollar amount. There may be no way of knowing how much money you can expect to receive until the retirement plan starts making regular disbursements.
Whether you’re trying to hold on to as much retirement money as possible or you’re trying to make sure you get your fair and equitable share from your spouse’s retirement accounts, call us. Barna, Guzy & Steffen has decades of family law experience. We understand the sensitive issues surrounding retirement accounts and we can help you navigate them in order to help you get a better financial outcome then you could get on your own. Call us now.