For many, living comfortably in retirement is the gold at the end of the rainbow. Married couples hope that they have planned appropriately so that they can share in this outcome. However, not all couples stay married up to and through retirement. What happens to the retirement nest egg in divorce?
Typically, retirement accounts are treated like most other marital property. If the contributions were made during the marriage, those contributions, along with the gains or losses, are considered marital property. These funds are taken into account when dividing all the assets and debts of the divorcing couple.
While there are many issues regarding retirement accounts, we have several scenarios and questions come up again and again. One of these common situations is when a spouse has been with their employer for longer than they have been married. Many think that their half of their entire retirement savings is now going to be transferred to their spouse. This, however, is not the norm. The only part of the retirement funds that should be considered marital (to be divided) is the portion saved during the marriage. The amounts contributed prior to the marriage (and the growth of those funds) are typically considered non-marital, and not subject to division.
For example, if you have been contributing to your 401-k for 25 years, but you have only been married for the last 10 years, the first 15 years of contributions would not be marital property. This would include any earnings on that 15 years’ worth of contributions. There can be exceptions, and this figure is typically not simple to determine, but it can make a big difference in the assets to be divided.
At Spooner and Associates, we have handled many cases with all types of retirement accounts and issues. We have the knowledge and expertise to answer your questions and assist you with these difficult financial decisions. We also have access to a team of financial advisors and accountants, if needed, including retirement and pension experts. Call us at (678) 714-1131 for assistance.