When it comes to property division, most people focus on the obvious, tangible assets such as homes and vehicles. However, you shouldn’t overlook retirement benefits and pension plans. For many people, a retirement account is one of their most significant assets.
Retirement accounts and pension plans are also subject to division upon divorce.
It doesn’t matter who contributed to the account
How is your ex entitled to a share if you’re the only person who contributed to the account? The law doesn’t care who put the funds into an account. What matters is when funds were added to an account.
Essentially, any contributions to a 401(k) or another type of retirement plan made before the marriage are not subject to division. However, contributions made during the marriage, including employer-matched contributions, are subject to division.
Determining the best way to divide benefits and pensions
Depending on the situation, it doesn’t always make sense to close a retirement account and split the proceeds equally. You should consider any financial penalties for early withdrawal. It might make more sense to give one party a larger share of assets to account for the value of a retirement plan.
If you and your ex can reach an agreement regarding how to divide your retirement benefits, that’s great. If you’re unable to reach a compromise, the court will have to decide. The court will attempt to find a solution that’s fair and equitable. In either case, you should discuss your options with a skilled legal professional who can help protect your interests.