Archive for the ‘Retirement Benefits’ Category

Retirement Benefits – general information

The term retirement benefits includes, but is not limited to, 401K’s, 403B’s, IRA’s, Roth IRA’s, pensions and profit sharing plans. The division of retirement benefits is part of the equitable distribution of assets and liabilities.

In most cases, the portion of the retirement benefits to be equitably distributed is the portion earned during the marriage, not the entire retirement benefit.

There are times when a party has earned retirement benefits prior to the marriage and those benefits are typically classified as that party’s non-marital asset.

The appreciation of the non-martial portion can sometimes be classified as a marital asset, but I will have to save discussion on that issue for a separate post.

If both parties have earned retirement benefits during the marriage and they are of similar type and value, then it usually makes sense for each party to keep their own retirement.

When there is a disparity in the values of the parties retirement benefits or when only one party has retirement benefits then a portion of one of the party’s retirement benefits may be transferred to the other party.

To avoid tax consequences, the transfer is sometimes accomplished by way of a Qualified Domestic Relations Order (QDRO).

The parties are free to negotiate a settlement where one party waives their right to the other party’s retirement benefits or otherwise trades other assets in lieu of taking a portion of the other party’s retirement benefits.

Copyright © 2009 Steven A. Leitman
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