For working adults, retirement offers a much-needed break from the hustle and grind of their jobs. Unsurprisingly, what happens to retirement funds during a divorce is a top concern for many individuals planning to end their marriage.
Every case is different. However, it is not uncommon for a divorcing spouse to be entitled to part of the other spouse’s retirement assets.
If you are getting divorced and you have questions about how retirement assets or Social Security retirement benefits are handled during a divorce, make sure to work with an experienced divorce attorney who can give you personalized guidance.
401(k)s, IRAs, Pensions, and Other Retirement Accounts
Money saved in a retirement account is treated like other assets during an Illinois divorce. Unless retirement assets are excluded from the marital state through a prenuptial or postnuptial agreement, any retirement funds a spouse acquired during a marriage are considered marital property.
Consequently, your spouse may be entitled to part of your retirement assets. In many cases, a Qualified Domestic Relations Order or QDRO is used to direct the retirement plan administrator to divide the funds. To avoid early withdrawal penalties and negative tax consequences, retirement assets are rarely divided immediately upon divorce. Instead, the retirement plan administrator will disperse the funds to the spouses upon retirement.
Divorcing spouses who negotiate their own property distribution arrangement may also decide that the spouse who earned the retirement fund should keep the funds, while the other spouse is compensated for his or her share of retirement assets with marital property of equivalent value. For example, a spouse may keep all of his retirement assets, but the other spouse receives the marital home as compensation for her share of the retirement funds.
Social Security Benefits
It is possible to receive Social Security retirement benefits based on an ex-spouse’s work record. Your spouse may collect spousal benefits based on your employment record if he or she:
Is not remarried
Was married to you for at least 10 years
Is at least 62 years old
You may be relieved to know that if your spouse claims Social Security benefits based on your work record, this does not affect your own Social Security benefits. You receive the same amount of money through Social Security retirement whether your spouse claims Social Security based on your work record or not.
Contact our Kane County Divorce Lawyer
The division of retirement assets during a divorce can be complicated and emotionally charged. Make sure you have a legal advocate on your side. Contact our skilled St. Charles divorce attorneys for personalized legal assistance and support. Call [[title]] at [[phone]] and set up your free initial consultation today.