Retirement accounts acquired during a marriage are generally considered marital property subject to division between spouses. Like all marital assets in Missouri, they’re expected to be divided in a “just” or equitable manner – which may not be 50/50. Factors taken into account include the length of the marriage, the financial contributions of each spouse and the future financial needs of both parties.
When it comes to retirement accounts, there are several approaches that can be taken. These include:
A direct division of the retirement account(s) between the spouses is entirely possible. This typically involves the preparation and approval of a Qualified Domestic Relations Order (QDRO) or a similar order that specifies how the benefits should be divided. The QDRO is then provided to the retirement plan administrator, who implements the division according to the court’s instructions.
Offset or balancing
Instead of dividing retirement accounts directly, it may be possible to offset the value of one spouse’s retirement account with other marital assets. For example, if one spouse has a significant retirement account, the other spouse may receive a larger share of other assets, such as the family home or other real estate, stocks or cash sitting in a savings account. If this route is chosen, it’s important to understand the tax implications of whatever is “traded” in order to make sure that they truly have the same value.
In some cases, the court may defer the distribution of retirement accounts until a later date. This could be due to factors such as the age of the account owner or the specific retirement plan rules. When the deferred distribution occurs, the account owner may be responsible for providing a percentage or a specific dollar amount of the retirement benefits to the other spouse.
It is crucial to understand how retirement accounts are typically handled and to work to better ensure that your rights and interests are protected throughout the divorce process. Seeking experienced legal guidance can help you negotiate an agreement with your spouse or assert your rights in court with confidence and a clear understanding of what you are due.