Resolving issues surrounding assets represents one of the more challenging aspects of many divorce cases, according to "The Complete Divorce Handbook: A Practical Guide," by Brette McWhorter Sember. For example, you may wonder what rights you possess in regard to retirement benefits accumulated by your husband during the course of your marriage.
Marital Asset
A key tip regarding your husband's retirement plan is that the account is a marital asset, according to "Nolo's Essential Guide to Divorce," by Emily Doskow. Because it is a marital asset, the retirement plan and associated benefits are subject to division between you and your husband during divorce proceedings.
The manner in which a retirement plan and associated benefits are divided depends on where you reside. A handful of jurisdictions are community property states, according to the American Bar Association. In these states, a retirement plan and benefits are split evenly between you and your husband, even though the plan is in his name. In an equitable division state, the court divides the retirement plan in a fair manner. Fair does not mean equal, but is based on the specific facts of your case.
Present Day Distribution
Even if your husband is not yet retired, you can see a present day distribution from the plan during the divorce proceedings. The court calculates the increase in the value of the retirement plan during the course of the marriage, and divides that amount according to distribution laws on the books in your state. The amount of money due to you is paid from the plan.
The downside of this type of early withdrawal from the plan is that taxes and penalties need to be paid in the process.
Qualified Domestic Relations Order
An alternative to a present day payment during the divorce is the use of a qualified domestic relations order. The order directs the administrator of the retirement plan to pay you an appropriate portion of the benefits at the time of your husband's retirement. Taking this course prevents you from obtaining immediate benefits from the retirement plan, but prevents losses due to early tax payments and penalties.
References
- "Nolo's Essential Guide to Divorce"; Emily Doskow; 2008
- "The Complete Divorce Handbook: A Practical Guide"; Brette McWhorter Sember; 2009
