Deciding what to do about retirement accounts can be a tricky part of divorce. Both spouses have often worked long and hard to amass their shared financial portfolio and the prospect of splitting it can be daunting. Moreover, the implications of dividing retirement accounts has the potential to impact both spouses long after the divorce is finalized; after all, running two separate households costs more than just one, and spouses will no longer be able to rely on the other’s earning power to get them through retirement.
Understanding how retirement accounts can be managed in a divorce is important as you begin to strategize the path you want your divorce to take. While asset division is ultimately under the purview of Illinois law, courts prefer divorcing couples to create an asset division agreement on their own. If you and your spouse can discuss your retirement options reasonably, you are more likely to reach an agreement that allows you both to maximize your future financial stability.
What Can We Do With Our Retirement Accounts in a Divorce?
One of the most commonly exercised options is that each spouse simply keeps their own retirement account. When both spouses have been working for similar amounts of time and making roughly similar salaries, this can be a simple and straightforward option–especially because Illinois law requires marital assets to be split fairly, rather than equally.
However, when one spouse took time out of the workforce to raise kids, or was unemployed for long stretches of time, or earned far less than the other spouse, each simply taking their own account may leave one spouse in a seriously disadvantaged financial situation. Spouses may instead choose an overall asset split that seems fair. One way to do this is by using Qualified Domestic Relations Orders (QDROs), which allow spouses to submit paperwork to a retirement account administrator once a divorce is finalized and receive their portion of a benefit payout without the assistance of the spouse to whom the account belongs.
Spouses may also want to negotiate retirement accounts as part of an overall financial strategy. For example, if one spouse is going to have to pay spousal support (alimony) to the other for a long time, they may instead negotiate for a portion of a retirement account or a lump sum of cash. All of a couple’s other assets, including ownership of a marital home, stocks, bonds, savings accounts, and more, can be part of this negotiation.
Call a Wheaton, IL Divorce Lawyer
Managing your retirement accounts in divorce is important for ensuring a secure financial future, especially if you are divorcing later in life. Get the help you need from an experienced team of DuPage County divorce attorneys with The Stogsdill Law Firm, P.C.. We offer comprehensive consultations so you can get a sense of your options and how we might handle your case. Get started by calling 630-462-9500 now.