Retirement funds and pensions can be some of the most valuable assets owned by a married couple, and ownership of these assets will need to be addressed during a divorce. In Illinois, these assets are subject to equitable distribution. This means that they will be divided fairly, but not necessarily exactly equally, between the divorcing spouses. When making decisions about these assets and taking steps to transfer or allocate funds between spouses, it is important to follow the correct procedures. A qualified family law attorney can provide invaluable guidance and ensure that a person’s rights and financial interests will be protected during the divorce process.
Evaluating and Dividing Retirement Accounts
In Illinois, all property and assets acquired during a marriage are considered “marital property” and are subject to equitable distribution in a divorce. This includes retirement accounts such as 401(k)s and IRAs.
The first step in dividing retirement accounts is determining their value. This can be done by using account statements or other documentation to calculate the current balance of each account. Once the value of the accounts has been determined, they can be divided between the divorcing spouses either through negotiation or by court order.
It is important to note that not all retirement accounts are created equal. For example, 401(k)s are subject to different tax laws than IRAs. As such, it is important to consult with a financial advisor or tax professional before making any decisions about how to divide retirement accounts in a divorce.
When dividing funds in retirement accounts, a couple will usually need to use a Qualified Domestic Relations Order (QDRO). A QDRO is a court order that allows for the division of retirement assets without triggering any taxes or penalties. QDROs can be used to divide 401(k)s and other qualified retirement accounts. For IRAs, a “transfer incident to divorce” may be performed, which will allow funds to be allocated in the same manner as using a QDRO.
Dividing Pensions in a Divorce
Pension benefits are also subject to equitable distribution, and if one spouse will be able to receive pension benefits upon retirement, the other spouse may be entitled to receive a percentage of these payments. However, unlike other types of assets, pensions usually cannot be divided directly in a divorce. Instead, one spouse may be awarded a percentage of the other spouse’s pension based on the length of the marriage and other factors.
Once the court has ordered that a portion of a person’s pension be awarded to their ex-spouse, that spouse will then need to take steps to ensure that they receive their share of the pension when it becomes payable. A QDRO may be used to establish the rights of one spouse to receive payments from another spouse’s retirement plan. While a QDRO can be used for private sector pensions, a special type of order known as a Qualified Illinois Domestic Relations Order (QILDRO) will need to be used for retirement plans that are sponsored by the state government, such as pensions paid through the Teachers’ Retirement System (TRS).
Contact Our Cook County Retirement Asset Division Lawyers
Dividing retirement accounts and pensions can be complicated, and it is important to understand how these assets will be handled in your divorce. With the help of an experienced Park Ridge property division attorney at [[title]], you can protect your interests and make sure that your future is secure. Call us today at [[phone]] to arrange a free consultation and learn how we can help you complete our divorce successfully.