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How are Retirement Benefits Split During a Divorce?

There are many factors that go into dividing retirement savings. This is one of the more complex areas of divorce law and an example of why trying to represent yourself in a divorce could cost you far more money than it might save.

Overall "marital" retirement benefits (those acquired during the marriage) can be divided between spouses in a divorce. If a spouse has "separate" retirement benefits (those acquired before marriage or after separation) those are not split. There are also benefits that are "co-mingled" because they have elements combining the two.

Benefit plans generally fall into two categories, defined benefit retirement plans (traditional pensions where a person gets a set amount based on income and longevity) and defined contribution retirement plans (where the employer contributes money but the benefits will depend on a number of variables, such as an IRA or 401k).

The parties will need to find out when the plan at issue started and whether it's co-mingled by the two spouses. If the plan was created prior to the marriage, it will likely be co-mingled (the marital element would be the increase in value during the marriage). If the plan was created during marriage it's generally included in the marital estate and could be divided.

Next the value of the retirement benefits that are considered co-mingled or marital needs to be determined. That could be done by accountants hired by the parties.

There's no easy answer to how retirement benefits are split between divorcing spouses because there's no clear rules or formula. Courts in Pennsylvania divide up property (including retirement benefits and savings) using the "equitable distribution" method, which uses numerous factors, including the length of the marriage and each spouse's age, health, education and income.

Part of the process would involve a Qualified Domestic Relations Order (QDRO). This is a court order allowing retirement plans to split benefits due to a divorce action. It states the rights of each party, the value of their benefits and has instructions as to how the benefits should be distributed between the ex-spouses. Some plans can't be divided without a QDRO including pension plans, profit-sharing plans and 401(k) plans.

If one or both of the spouses served in the military long enough to qualify for a military pension it can be part of the divorce. Federal law allows state courts to apply the family law principles of their jurisdiction when deciding how to divide a military pension.

These benefits can be split by an agreement stating an ex-spouse will get a percentage of the benefits or a set amount of money or the spouse in the military could agree to exchange an amount of money or property in exchange for obtaining all the benefits.

If you have any questions about retirement benefits and divorce or you feel you need legal representation to protect your rights, contact our office so we can talk about your situation and how we can help.

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