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What Happens to Retirement Accounts in Divorce?

Posted on in Division of Assets

naperville divorce lawyerWhen a couple has decided to divorce, part of that process involves dividing their assets and debts in an equitable manner. As you go through and list the assets you and your spouse have, one asset that you may overlook are any retirement accounts either of you may have. Illinois recognizes retirement funds accumulated during the marriage as marital assets, so they become part of the marital estate and are divisible in the divorce.

Dividing Retirement Accounts

The division of retirement accounts can be complex because of the federal and state laws and regulations that may apply. There is also the issue of ownership of the funds that are in the account. Any funds that were accumulated in a retirement account prior to the couples marriage is considered separate property and does not become part of the divorce settlement. It is only the funds that accumulated while the couple were married that are distributable. This is why it is important to have a skilled Naperville divorce attorney representing you, to ensure your best interests are protected.

Ideally, the spouses will agree to offset assets and the retirement account will maintain intact. For example, one spouse may agree to take sole ownership of a vacation property the couple owns that has the same value of the other spouse’s retirement account. If both spouses have retirement accounts, then another option is that they agree that they will each keep their own accounts separate from the marital estate and any divorce settlement.

If an account will be divided, then the court will issue a special order referred to as a qualified domestic relations order (QDRO). A QDRO orders the plan administrator overseeing the retirement account to make payments to another party other than the person who earned those benefits. Unless there is a valid QDRO, the plan administrator is not allowed to make those payments.

If the spouse who owns the retirement account earned the funds as an employee for the state of Illinois, the order for the plan administrator is a different one, referred to as a Qualified Illinois Domestic Relations order (QILDRO).

Contact a DuPage County Divorce Attorney

If you are planning on divorcing your spouse, having a dedicated Naperville division of assets attorney from Pesce Law Group, P.C. representing you is crucial in ensuring you obtain your fair share of the marital estate. Call 630-352-2240 today to schedule a free and confidential consultation.

Sources:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-qdro-qualified-domestic-relations-order

https://www.srs.illinois.gov/SERS/qildroforms_sers.htm

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