Divorce is a time for couples to divide up their financial assets. For many couples, especially those who are getting older, one of the most important assets they have is a retirement account. They may have spent years saving together, or one of them may have an employer-sponsored pension or a retirement plan.
But you may be wondering what’s going to happen to that retirement plan when you and your partner split up. After all, the outcome will have a major impact on your financial future. Let’s consider how the following assets may be divided:
Personal savings
If you and your spouse have saved up your money together, then this savings account likely just has to be divided between the two of you. If you’d like to keep the entire retirement account, your spouse may agree to this in exchange for other assets, such as the home. But any money that you’ve saved together simply counts as part of your total assets, and it needs to be divided.
Retirement plans
Things are a bit different if you have a retirement plan through your employer. If this is the case, then your spouse may need to use a qualified domestic relations order (QDRO) to claim part of your plan. If they do this, the QDRO will define how much you need to send them every month once you start collecting. This financial asset has to be divided, as well, but it is done with a QDRO because you’re probably not collecting on your pension already.
Exploring your options
Dividing assets can get complicated, especially with expensive ones like retirement accounts or family homes. Make sure that you know about all of the options that you have.
