Are Retirement Assets Untouchable In Divorce?

[QueensFinest]

I know that there are some cases where retirement assets are untouchable. For example, they are not factored into financial aid calculations.

If a couple gets divorced, does the wealthier party half to split up half of their retirement assets (IRA, 401K) with the other party?

 

[Martha]

Maybe yes, maybe no. However, retirement assets are not in any way automatically shielded from division in a divorce. QDRO's (qualified domestic relations orders) are common in divorce and used to divide up retirement assets. FAQs About Qualified Domestic Relations Orders

 

[Westernskies]

Is this a trick question?

 

[QueensFinest]

What if the wealthier party never put the other party's name on the retirement accounts?

 

[M Paquette]

What if the wealthier party never put the other party's name on the retirement accounts?

It's OK. The judge will correct that oversight if needed.

 

[Martha]

What if the wealthier party never put the other party's name on the retirement accounts?

You can't put someone else's name on retirement accounts. At most, you can list beneficiaries.

 

[Nords]

It's OK. The judge will correct that oversight if needed.

In California the judge will correct that oversight even if the "pensioner" spitefully elected not to draw a pension...

 

[SecondCor521]

Divorce law is state-specific, so you'd have to check with your own state to be sure. And I am not a lawyer.

However, in Idaho law, there is nothing that shields retirement assets from being divided, and in fact it is quite common to have a QDRO type of thing. In my own case, we divvied up the assets and liabilities in a way that made sense (she took one car, I took the other, I took all the debt and my retirement accounts, she took her retirement accounts and the motorcycle, etc.) and used an "equalization payment" from my traditional IRA to her traditional IRA to make our respective totals equal 50/50. The equalization payment was a non-event from a tax point of view.

Idaho is a community property state, so it really doesn't matter who earned what or who owned what when; it all goes into one big pile and the presumption is that a 50/50 split is the fairest thing to do. In Idaho just because the titling is one way or another doesn't make a difference in the division of property. Other states may be different, especially non-community property states.

In Idaho, there are two general categories of asset that are excluded from being considered marital property:

1. Individual gifts or inheritances that have never been commingled in any way.
2. Assets brought into the marriage that have never been commingled in any way.

In my case I was married young and was married for long enough that the above two exceptions didn't really apply. My parents did give me some graduate school assistance while my STBX and I were separated, and I was able to exclude that.

2Cor521

 

[RonBoyd]

What does your "Pre-Nup" dictate?

 

[plex]

More often than not, retirement assets will get divided up in divorce, but there are a number of exceptions, as has been mentioned. A proper pre-nup is probably the biggest exception.

 

[W2R]

My ex and I had an uncontested divorce, and we agreed on a division of property (and had no custody issues) so we wanted to keep it out of court. This was 13 years ago with no pre-nup.

My attorney said that after 23 years of marriage I had a right to half of his 401K, and pleaded with me to take it to court to get that.

I told him no, so I didn't get it. (Consequently our divorce only cost $250 total.) But from what my lawyer was telling me, in a community property state like Louisiana the spouse's 401K is not shielded.

 

[eridanus]

Oops, never mind. Read too quickly.

 

[Bestwifeever]

QueensFinest, I looked back at your first posts here and you are 23 or 24, it looks like. So any sharing of retirement assets should be fairly inconsequential in the long term if you're asking about your own situation.

 

[M Paquette]

In California the judge will correct that oversight even if the "pensioner" spitefully elected not to draw a pension...

Ah, the joys of DissoMaster. Assets check in, but they never check out... In California, most family law firms and courts use a suite of software, including DissoMaster, Propertizer, and Executioner (cute names, eh?) to slice, dice, and make [-]Julienne fries[/-] support payments and division of assets and debts out of the former marriage finances.

 

[Nords]

Ah, the joys of DissoMaster. Assets check in, but they never check out... In California, most family law firms and courts use a suite of software, including DissoMaster, Propertizer, and Executioner (cute names, eh?) to slice, dice, and make [-]Julienne fries[/-] support payments and division of assets and debts out of the former marriage finances.

IIRC in the 1990s a Navy chief petty officer transferred to the Fleet Reserve and specifically declined his military pension. (I have no idea how one does that.) He apparently did so for no other reason than to spite his soon-to-be-ex-wife at the divorce proceedings.

The CA judge proceeded to award her the portion of his pension she would have been entitled to, and put out a payment order to that effect.

It made for sensational news at the time but I don't know how the appeals worked out. I don't think you can go back to the Board for Correction of Naval Records, let alone DFAS, and say "Um, I've changed my mind about that pension..."