palatine divorce lawyerIf you are getting divorced, you may have many questions and concerns about the property division process. Often, the first things that come to mind when thinking about asset division are physical assets like the home and vehicles. However, valuing and dividing complex assets like retirement accounts is often more complicated and time-consuming. Whatever age you are, retirement is likely an important concern for you. Read on to learn about how retirement plans are addressed during Illinois divorce cases.

Determining the Value of Your Retirement Plan

Divorcing couples may be able to negotiate property division and make a decision without the Court’s involvement. However, regardless of whether property division is resolved through the Court or via an out-of-Court settlement, the spouses will need to determine the value of the retirement assets first. If you or your spouse have a defined contribution retirement plan like a 401(k) or 403(b), determining the value of the retirement plan should be relatively straightforward.

Defined benefit plans like pensions are more difficult to value and divide during divorce. A pension’s value depends on the pension-holder’s total years of service to the employer and average annual income. If a spouse owns a pension but has not yet retired, determining the present value of the pension for the purposes of divorce can be quite complex and require professional appraisal.

Who is Entitled to Retirement Funds?

Assets that either spouse obtains while they are married are marital property – with a few exceptions. Retirement plans may be considered partly marital property and partly separate property. If you had $10,000 in your 401(k) before you got married, those funds may be considered separate property. However, any contributions made to the retirement plan during your marriage may be considered marital property. This means that your spouse is entitled to an equitable share of the retirement funds classified as marital property.

Understanding the Purpose of a QRDO in an Illinois Divorce

Some spouses choose to divide retirement assets between them during divorce. Others choose to assign retirement assets to the spouse who earned those assets and assign other marital property to the other spouse. A Qualified Domestic Relations Order (QDRO) is a Court order that instructs a retirement plan administrator to split retirement funds between the spouses. QDROs are used to divide 403(b)s and 401(k)s, while a separate process is used to divide IRAs. A Qualified Illinois Domestic Relations Order is a similar legal tool used to divide retirement benefits for state employees in Illinois.

Contact an Arlington Heights Divorce Lawyer

Valuing and dividing retirement assets is one of the most important and most complicated parts of the asset division process during divorce.  Arlington Heights divorce attorney Nicholas W. Richardson can help. Call our office at 847.873.6741 for a free, confidential consultation today.

Sources:

https://www.forbes.com/sites/catherineschnaubelt/2019/05/08/how-to-divide-retirement-plan-assets-in-a-divorce/

https://www.investopedia.com/articles/personal-finance/102715/deferred-compensation-plans-vs-401ks.asp