Property division is an essential part of divorce. It’s so important that, if you can’t agree on the terms of division with your partner, the court is likely to get involved.
Virginia looks for equitable division in divorce. This means the court will look for a fair share for each partner, but not always an even share. In many cases, marital property division involves retirement accounts.
Plans like 401(k)s, IRAs and mutual funds could all be subject to division in a divorce. In terms of how retirement funds are divided, factors to consider include:
- When you established the accounts
- How you funded them
- How much they’ve grown over time.
For example, an IRA you established before marriage may be considered separate property (not necessarily divisible) if you stopped funding the plan once your got married. However, a pension plan from a job you started after your marriage date may be divisible between you and your spouse.
The process is typically different for military pensions, which have their own rules set by the federal government. If you are or were a military member, the overlap of your marriage and your service, along with the duration of your marriage, can affect how the funds will be divided in the event of divorce.
A Qualified Domestic Relations Order (QDRO) is typically used to determine how retirement funds will be divided between divorcing spouses. The QDRO will go directly to the party that handles your plan. It will spell out that your spouse will also receive benefits and how the funds will be distributed. The distributions might come from a single fund, or a separate account, independent of yours, may be created to distribute funds to your spouse. Either way, a percentage of your retirement assets may be funneled toward your former spouse.
The process of dividing marital property can be extremely complex, particularly when complex assets like investment accounts and retirement plans are involved. Make sure you know what’s on the line, and speak with an attorney as soon as possible to protect your fair share of marital property.