Division of Retirement Benefits

Often a couple may enter a marriage after one or both spouses established an individual retirement plan. However, during marriage spouses continue to contribute to those pre-existing plans with community funds or perhaps roll the plan into a community plan.

Part of the property division conversation includes determining each party’s separate contributions to a retirement plan. Additionally, the appreciation on those separate property interests, the community property interests, and the appreciation in each of the respective plans.

In a divorce, you can divide those plans without penalty or tax consequence as long as it is part of a divorce process.

Retirement Benefits

Division of Defined Benefit Plans and Defined Contribution Plans can be complicated if not handled properly because they are assets that may not be accessed until many years in the future.

Fairly dividing up such an asset requires some more sophisticated knowledge of federal and state laws and IRS regulations. Sometimes division of a retirement asset may require a Qualified Domestic Relations Order (QDRO) a specialized order to divide retirement assets properly. Because there are numerous places where federal and state laws, community property laws, employment laws, actuarial tables, and other topics intersect, this is an area that should definitely be handled by an experienced divorce professional.

Knowing how and when to divide a retirement asset as part of a divorce to maintain the transfer as a penalty-free and tax-free transfer require more specialized knowledge. Because the consequences for improperly handling these issues can be severe I always recommend that such issues be handled by a California-licensed attorney with experience in this area.

When I can properly advise and carry out a resolution that protects a family’s interests in a retirement plan I will do so; however, at times these highly specialized assets may requires the assistance of a legal professional with an even more specialized knowledge because they only handle insuring that retirement assets are divided in a way that protects by the plan participant but the non-participant spouse. These are not discussions or decisions you need to navigate on your own. Kathy Campbell, a California Divorce Attorney will help you work through this part of the process.