Many couples in Maryland save for retirement as they go through a marriage. Sometimes one spouse may save more than the other, but the savings either couple puts into retirement accounts can be enjoyed by either spouse after retirement. However, not every couple makes it to retirement as a married couple. Many couples divorce prior to retirement and at the time the divorce may have significant assets in the various retirement accounts that they own.
These assets like other marital assets must be divided in the divorce. However, since there are a number of different laws governing retirement accounts, they are not as easy to divide as savings account at a bank. There are also different types of retirement accounts as well. People may have 401(k)s, 403(b)s, Individual Retirement Accounts (IRA), pensions and other retirement accounts. To make things even more complicated, how each of these are divided depends on the type of retirement account people own.
IRAs may be one of the easier types of accounts to divide. People can simply roll over any assets going to the other spouse to another qualified account without anything more than the divorce decree. Money from 401(k)s or other defined contribution plans can also be rolled over into other qualified accounts, but in order to actually transfer the money people need a second order called a Qualified Domestic Relations Order (QDRO) before the money will be transferred.
Pensions and other defined benefit plans are potentially the most complicated because people will only receive the money in a monthly payment during retirement. So, people either need to determine the present value of the pension and attempt to provide other assets to the spouse to provide their share. People can also determine the marital portion pursuant to formula and the other spouse will receive their portion of the monthly benefit during retirement. The couple could also defer the decision on pensions until closer to retirement when they will know the exact monthly benefit.
There are many different assets that people in Maryland acquire during marriages. All of these assets need to be divided in divorces and some assets can be more complicated than others to divide. Experienced attorneys understand how these assets are divided and may be able to guide one through the process.
