When going through a divorce, retirement accounts can play a central role. For many couples, their retirement accounts contain the majority (if not virtually all) of their life’s savings, and protecting this savings is a priority for both spouses.
So, what happens to retirement accounts in a New Jersey divorce?
As with all aspects of the divorce process, the answer to this question depends on the specific circumstances involved. In most cases, divorcing spouses will have several options, and they will need to choose the option that ultimately makes the most sense for their individual financial circumstances.
Are Your Retirement Accounts Separate or Marital Property?
When dealing with retirement accounts during a divorce, the first issue that needs to be addressed is whether – and to what extent – either spouse’s accounts are subject to equitable distribution. As a general rule, any assets that one spouse brings into a marriage are that spouse’s assets to keep, while any assets obtained during the marriage are subject to division in the divorce.
This can present some challenges with regard to retirement accounts in particular. For example, if one spouse owns a retirement account before the marriage but then continues to contribute to the account during the marriage, only a portion of the account may qualify as marital property.
What Options Do You Have for Dividing Your Marital Retirement Accounts?
With regard to retirement assets that qualify as marital property, divorcing spouses have a variety of different options when it comes to making an equitable distribution. Some of the most common options include:
- Each spouse keeps his or her own retirement accounts. If each spouse owns retirement accounts of substantially equal value, then they may simply agree that each spouse will keep his or her own accounts.
- One spouse keeps his or her retirement savings while giving up other assets. If a couple has assets of substantially equal value to one spouse’s retirement savings, then they may agree that the spouse who earned his or her retirement savings will keep that savings in exchange for giving up his or her interest in other property.
- The spouses divide one or more retirement accounts. If neither of the above options makes sense, then spouses can agree to divide one or more retirement accounts as part of the equitable distribution process.
Will You Need to Obtain a Qualified Domestic Relations Order (QDRO)?
If divorcing spouses agree to divide one or more retirement accounts, then it may be necessary to obtain what is known as a qualified domestic relations order (QDRO). This is necessary for certain types of accounts in order to have distributions paid to a former spouse. If this comes up in your divorce, our attorneys can take care of all of the necessary documentation, and we can help make sure you feel confident and informed every step of the way.
Speak with a New Jersey Family Lawyer at Helmer, Conley & Kasselman, P.A.
If you are thinking about getting a divorce and would like to know more about New Jersey’s equitable distribution rules, we encourage you to contact us for a confidential initial consultation. To speak with a New Jersey family lawyer at Helmer, Conley & Kasselman, P.A., please call 877-435-6371 or request an appointment online today.
