Divorce and Retirement Accounts
There are many complicated aspects of a divorce, but one that people tend to have the most trouble with is the division of assets. Married couples often have a lot of shared investments, and most of these are not liquid assets that can be easily divided between the spouses.
When dealing with the division of complex assets, it is best to work with an experienced divorce attorney who has an understanding of marital property and how these assets should be divided.
At Froerer & Miles, our attorneys have worked many cases involving divorce and retirement accounts in the Odgen, UT area. We will work hard to ensure our clients receive their fair share of any shared marital property, including retirement accounts.
Determining the Value of a Retirement Account
The first step of dividing a retirement account in a divorce is determining the value of the account. There are generally two types of retirement accounts.
The first is a defined contribution plan. A defined contribution plan is one in which an employee, employer, or both, deposit money into some type of savings account, such as a 401(k). It is easy to determine the present value of a defined contribution plan, because it is essentially whatever money is in the account at the time of the divorce.
The second type of account is a defined benefit plan. A defined benefit plan is a company pension. When someone has a defined benefit plan, they begin receiving monthly payments once they retire. The amount of the payments is based on factors such as years of service and salary history. It is more difficult to determine how much a defined benefit plan is worth, but our attorneys work alongside financial experts to determine the value of the account at the time of the divorce.
It is important to note that the entire value of a retirement account may not always be divided in a divorce. If one spouse earned a portion of the retirement account before the marriage began, that part of the account will likely be considered separate property. It is only the portion of the retirement account that is earned during the span of the marriage that will be up for division.
Dividing Retirement Accounts
Once the value of a retirement account has been determined, our attorneys can work on how to best divide the account. Retirement accounts are generally divided in one of two ways, either through the immediate offset method or the deferred distribution method.
- Immediate offset: Immediate offset allows one spouse to retain full control of the retirement account, while giving the other spouse his or her share of the account value. This is done by giving one spouse other marital assets that are equal in value to their share of the retirement account, in exchange for signing over rights to the account.
- Deferred distribution method: The deferred distribution method essentially leaves the retirement account alone until the time comes for benefits to be paid out. A court order will be filed to set out what portion of the account each spouse is entitled to once payments begin. When benefits become payable, separate payments will be made based on this order.
Our attorneys will look at the specifics of each divorce and make recommendations regarding the best way to divide any retirement accounts.
If you have questions about the division of property in a divorce, or are looking for an experienced attorney to guide you through divorce proceedings, we can help. Contact us at your earliest convenience to speak with a lawyer at Froerer & Miles.