How Will My Pension Be Valued for My Divorce?

 Posted on October 24, 2016 in Division of Property

Depending on the position you hold, you might have a pension plan. A pension is a fund that a working individual contributes to during his career, which is then invested by the manager of the pension in an effort to have the fund earn money. The intent is to put the worker in a position to retire comfortably. When the worker retires, he or she receives a monthly payment from his or her pension. Many Americans rely on multiple retirement accounts, which can include IRAs, 401(k)s, 403(b)s, and health savings accounts as well as pensions to save money for retirement. In a divorce, retirement accounts are treated the same way as all other assets – subject to division according to the doctrine of equitable distribution. This is true even if you opened your retirement accounts before you were married because you continued to contribute to them during the marriage.

Your accounts may be divided into “marital property” and “singly-held property” portions by determining how much money they contained before you were married to determine how much money may be considered to be part of your marital estate. Before you enter the property division process, talk to your lawyer about how your pension will be valued so it can be distributed in an equitable manner.

Valuing Your Pension

You may need to bring in a pension valuation expert to determine the true value of your pension. Pensions can be complicated because their values fluctuate and because in many cases, a portion of one's pension is not marital property. Working with a pension valuation expert is similar to working with a real estate appraiser to determine your home's value or a business appraiser to determine the value of your small business.

Once a value is determined for your pension, it can be divided along with your other marital assets. In some cases, the court simply designates the entire fund to the party whose name is on the fund. In exchange for this, the other partner may receive another one of the couple's financial accounts in its entirety or he or she may receive an equivalently-valued asset or share of an asset, such as a larger portion of the couple's home's value. Another option the court has is to create a qualified domestic relations order (QDRO) to name one spouse as an alternate payee of the pension. In this type of case, the alternate payee receives a portion of the pension's funds.

Work With an Experienced Kane County Divorce Lawyer

If you have recently filed for divorce or if you are considering doing so in the near future, speak with an experienced Kane County divorce lawyer about what you should expect from the property division process and other aspects of your divorce. Contact our team at The Goostree Law Group today to set up your initial consultation with a member of our team. Pensions and other retirement accounts can be complicated. We can answer any questions you have about their valuation and division during the divorce process. 

Disclaimer: Goostree Law Group uses an outside QDRO consultant to assist in the preparation of QDRO documents. 

Source:

https://www.irs.gov/retirement-plans/plan-sponsor/types-of-retirement-plans-1