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What happens with retirement funds when you file for divorce?

On Behalf of | Aug 14, 2023 | Divorce |

With an increasing number of divorces initiated later in life, dividing assets becomes more complicated. Older adults traditionally have assets that younger ones may not, including retirement funds built over decades.

What are your options for dividing retirement funds as part of your divorce settlement?

Considering the type of fund

The type of retirement fund is a factor in the decision. Divide retirement accounts that you or your spouse paid into. Alternatively, company-funded and vested funds might remain with their intended beneficiary.

Addressing company-funded retirement accounts

If you or your spouse have a company-funded retirement account from a job acquired during the marriage, the court might award the non-owning spouse a portion of the value of the fund if their financial situation warrants it due to your relationship and established expectations.

Dividing paid-in retirement accounts

Most courts will split the value of paid-in retirement accounts based on each spouse’s contribution and participation in the marriage. You may need a Qualified Domestic Relations Order if you and your spouse choose to simply divide the funds within the retirement account.

Choosing alternative funding solutions

In some cases, you might prefer to choose an alternative approach for resolving your retirement fund distribution. For example, if your share in the family home is equal to your spouse’s share in your retirement, consider a trade. If you sign over your share of the house, you retain the full value of your retirement.

Understand the basics of retirement fund asset distribution to help negotiate the settlement in your divorce.