How to Divide Retirement Assets in a Divorce
Planning for your retirement is a responsible, forward-thinking move, but those assets can be tricky to contend with if you and your spouse get divorced. Oregon is an equitable distribution state, which means all marital assets are subject to division in a way that is fair and equitable. In other words, couples who share retirement assets may need to split those assets when their marriage ends. However, dividing assets is rarely as simple as a 50/50 split.
If either you or your spouse have any retirement assets to speak of, make sure you understand how these funds could be affected during your divorce.
Are My Retirement Accounts Marital Property?
According to equitable distribution laws in Oregon, all assets acquired during the marriage are considered marital property because courts assume that both spouses contributed equally.
In most cases, retirement funds accrued during the marriage will be counted as marital property, which means they will be subject to division. There are exceptions, but they aren’t extremely common.
How Are Retirement Plans Divided in Divorce?
It is possible for couples to split their retirement funds, even if they are nowhere close to retiring.
A special document called a qualified domestic relations order (QDRO) must be completed to divide retirement funds. This order explains how the benefits such as 401ks and pensions will be distributed between the spouses to avoid penalties for taxes and withdrawals.
What Factors Determine the Division of Retirement Accounts?
The way the retirement fund is split will depend on:
- The duration of the marriage
- When the fund was created
- If either spouse contributed to the fund prior to the marriage
Like all other property, the retirement assets must be properly valued before they can be divided.
What About Retirement Contributions Before the Marriage?
If one spouse established the retirement fund prior to the marriage and contributed to it independently before the marriage, that portion of the funds will likely be retained by that spouse and will not be subject to division.
The remaining funds will be split just like any other marital asset. In other words, the division will depend on each spouse’s contribution to the marriage, their earning capacities, their health, the duration of the marriage, and so on. This applies to pensions, 401(k) plans, and other retirement funds.
Can One Spouse Keep All of the Retirement Funds?
In short—yes. If the retirement plan is considered separate property (though this is rarely the case), or if both spouses agree to keep the retirement in one spouse’s ownership, the non-receiving spouse might collect other assets or funds in lieu of the retirement.
For example, if one spouse keeps the retirement funds, they might pay additional alimony to the other spouse. Or, the spouse who retains the retirement funds might forfeit another valuable marital asset, like the house or a savings fund.
Questions About Divorcing? Call Us.
If you are about to begin the divorce process and you’re concerned about what will happen to your retirement, make sure you know your legal options. Our experienced divorce lawyers at McKinley Irvin can help you understand relevant Oregon divorce laws and we will work with you to find a solution that suits your needs. Contact McKinley Irvin to get started.