Dividing Retirement Plan Assets In A Divorce Settlement

The first or second biggest asset in a marital estate is the benefits/accounts that one or both married partners have accumulated during their marriage. Properly dividing these benefits/accounts in a divorce demands that each of the parties, and their advisors, be fully informed as to how and when that division should be implemented .

“DIVIDING RETIREMENT PLAN ASSETS IN A DIVORCE” – a clear and concise paperback release/e-book about how to properly apportion retirement plan assets in a divorce – is now available. This guide provides detailed information for:

  1. The divorcing parties, making sure that each party receives his/her rightful share of retirement plan benefits/accounts.
  2. Their legal representative, supplementing their discussion with their clients in connection with all of the retirement plan benefits/accounts sharing choices needing review .
  3. Their accountants, as they delineate the assets in the marital estate to be divided .
  4. Their financial advisors, regarding the investment considerations that will be applicable to the division of retirement plan assets, particularly with reference to the IRA Rollover that may evolve from that division.
  5. Pension pros, who may use the paperback release/e-book as a tool to give to prospective clients and client referral sources in connection with possible plan benefit/account valuation and QDRO preparation work.

(NOTE: A 2013 United States Supreme Court decision, and the follow-up rulings by the governmental agencies involved in regulating retirement plans, brings same gender marriages and spouses into the world of retirement plan benefit/account sharing in a divorce negotiation . The State where the marriage was performed determines the legitimacy of the marriage, not the State of domicile.)

There are a number of reasons why the division of retirement plan assets has to be carefully considered. For example, many marital unions begin with one or both parties having been employed for some time, where that employment provided for participation in a retirement plan. Therefore, the portion of the retirement plan benefit or account that accrued during the marriage did not begin at zero . There are several methods to determine how to exclude, or partially reflect, the portion of the benefit or account to be divided which is attributable to the pre-marital years.

In addition, a detailed discussion is required with regard to the many ways to divide the retirement plan assets between the divorcing parties. If we know the worth of the retirement plan assets, do we just offset it against one or more of other marital assets? Or, do we distribute the shares now, later, or at some other point in time?

Finally, some very unique issues typically arise in reviewing the marital assets attributable to retirement plan assets. These include, but are not limited to, retirement plan funds that were previously distributed to an IRA for one or both parties; retirement plan funds that were borrowed during the marriage; and special bonus retirement benefits provided.

The new book release “DIVIDING RETIREMENT PLAN ASSETS IN A DIVORCE” is a useful resource for divorcing parties, and their advisors, to help answer all of the above questions, and more.

Howard Phillips is a pension actuary, and has helped companies and their employees with the design, installation and administration of their tax-qualified retirement plans.

Over his 40 year career, Mr. Phillips was President of Consulting Actuaries Incorporated and President and Director of The American Society of Pension Professionals and Actuaries.

DIVIDING RETIREMENT PLAN ASSETS IN A DIVORCE is his first book.

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