Do Not Ignore Retirement Plans During Divorce Negotiations

Financial security is one of the major concerns for many when planning their divorce. The issue is particularly acute for those who did not work outside the home or have seen their income limited by family obligations. There may be a long list of shared assets, including the house and other property, bank accounts and investments. Still, retirement plans become an increasingly valuable element as couples put more and more money into them. They need to decide how to divide IRAs, 401(k) plans, pensions and other arrangements to support them after retirement.

What to know

Despite some of these accounts possibly tied to one spouse’s employment, retirement accounts created or expanded during the marriage are a marital asset. The courts typically address this issue using a Qualified Domestic Relations Order (QDRO), which authorizes organizations attached to the retirement accounts to divide them, so spouses receive a fair share.

This may come as a surprise, mainly if the spouse is not involved in the finances beyond balancing the checking account or monitoring autopay. Here are some steps for addressing the knowledge gap on retirement accounts. Ignoring them could be a decision that the spouse later regrets:

• Learn the importance and value of a QDRO
• Prioritize these accounts as essential for long-term financial stability
• Better understand household finances and the value of the estate’s assets

This is business

Some do not feel comfortable talking about money, but it is essential for a spouse as a member of the marital partnership to communicate their needs and concerns on this matter. Experts suggest the following as constructive ways to address financial issues:

• Stick to the basic concepts and use specific examples
• Keep the tone informational and fact-based rather than emotional
• Offer a preliminary plan for addressing it
• Remind them that retirement accounts are divided similarly to other marital assets
• Stress the need to address this during the divorce, not after
• Encourage the use of a QDRO, but be open to other viable options

Talk to someone who does this all the time

Family law attorneys can guide their clients through the entire divorce process, helping to ensure that the split is fair and equitable. They can also take the lead when a spouse is resistant to “their” retirement or otherwise is not forthright with information on this matter.