How are retirement benefits split in a divorce?

You and your spouse work hard to build a nest egg. While planning for your future, there may be bumps in the road. Unfortunately, for couples who cannot work out their issues, filing for divorce may be the only solution.

If you are recently divorced, you may be wondering how retirement benefits will be distributed. With Virginia having a divorce rate of 3.1 per 1,000 population, the question is likely on many people’s minds.

Our Northern Virginia divorce attorneys would like to discuss the process of splitting retirement benefits in a divorce and how our legal team can assist you.

Virginia Laws on Property Distribution

To better understand how retirement funds may be divided upon divorce, we need to understand how Virginia divides marital property. Marital property is any property acquired by either you or your spouse during the marriage. This will include real estate, vehicles, jewelry, furniture, and retirement accounts.

Virginia, along with forty other states, practices equitable distribution of property. The court will divide assets based on what a judge deems fair, not necessarily equally.

To determine what is fair, a judge will consider a number of factors, including when the assets were acquired, their value, each person’s financial contributions to the marriage and property acquisition, and whether any portion of the property value may be partially or entirely separate. In certain circumstances, Federal or Virginia law may prohibit a spouse from receiving more than 50% of the marital share of a retirement asset.

Qualified Domestic Relations Order

Not all retirement assets can be divided in a divorce. For retirement funds to be divided, the fund must be distributable between the parties by law or by its terms and divided by a specialized order. Non-government employer retirement plans that are subject to the terms of the Employee Retirement Income Security Act (ERISA) of 1974 are divided by a Qualified Domestic Relations Order, or QDRO, which is normally prepared by a divorce lawyer. Similar orders to divide retirement assets exist for other types of employers, such as the military or federal employees, and have different names, such as a Court Order Acceptable for Processing (COAP) while serving the same function. All such orders will need to be sent to the court to be reviewed and signed before they can be submitted to the retirement benefits administrator for distribution between the parties. These orders allow benefits and funds to be distributed from a participant’s retirement plan to an alternate payee.

A retirement distribution may also be ordered to pay child support, spousal support (alimony), or as part of the equitable distribution of marital property.

Some private industry retirement plans are not subject to any laws providing for their division between parties in a divorce. Those plans must be carefully evaluated by divorce counsel to ensure that they are accounted for in the divorce process.

How Can a Divorce Attorney Help?

At Culin, Sharp, Autry, & Day, we understand that divorce brings both emotional and financial stress. We make it our mission to help ease the financial strain that you may be experiencing during this time. Requesting a retirement distribution may be a necessity, given your financial situation. High net worth families and business owners may have especially complex retirement and deferred compensation marital assets. Our attorneys can help you determine your rights regarding these benefits with the goal of effecting a fair distribution of them in your divorce process.

Contact a Northern Virginia Divorce Attorney Today

Your financial comfort following a divorce matters. Whether you are requesting access to retirement benefits or seeking to protect retirement assets, our legal team can help. Contact us today online or by phone to schedule your initial consultation.