Dividing Retirement Accounts and Pensions During Divorce: What to Expect?

Your retirement account or pension can be one of the biggest assets you have accrued after you have worked for years. You have probably saved enough for your retirement. But, if you divorce, you may wonder what happens to these accounts. 

Unless you have a prenuptial agreement in place, a judge will decide how to divide your assets. Because every couple has unique assets and situations, the outcome of every divorce is also unique. But, it is important to understand the laws on equitable distribution in Ohio, so you will know what happens with retirement accounts or pensions. Columbus OH divorce and family law attorneys have experience in divorces that involve retirement issues. They can walk you through the process of dividing retirement accounts. 

Your Spouse May Have a Claim to Your Retirement Account

Even if your retirement account is in your name, the amounts you deposit into it will be split equitably between you and your spouse in a divorce. But, deposits and investments you made before you got married are still separate property. If the amounts are a product of income you make during your marriage, you and your spouse will share the value, no matter who worked more. 

A QDRO Can Help You Avoid Penalties and Fees

When you and your spouse decide to divorce, you could face possible penalties and fees when you split the account and withdraw from it early. Thankfully, a qualified domestic relations order or QDRO will let your plan manager divide retirement accounts without incurring penalties to you. They can transfer a certain amount to a new account in your spouse’s name. Your attorney will ensure you have the proper court paperwork, so you don’t incur financial penalties. 

There are Many Ways to Divide Pensions

Pension plans you and your spouse have through an employer can also be divided by the courts during a divorce. How these benefits will be divided depends on a lot of factors such as child and spousal support orders. Your spouse may get half of the value of the pension. But, the court may mandate dividing the actual pension benefits when it’s time to pay out. The benefits can be part of alimony or as a source of income for the dependent spouse. To make sure you get what’s rightfully yours in this matter, let your lawyer help you understand expectations and the possible actions family courts may take when it comes to retirement accounts.