Dividing Retirement Plans at Divorce
For couples going through the divorce process, the division of the parties’ retirement plan/s is a task that requires careful consideration. This division in the legal divorce process is more complicated than the family law process of dividing other assets and debts. It is not a simple, automatic split-in-half division. California community property laws can make this division complicated and confusing.
One of the first steps in division of retirement plans in the family law divorce process is to determine what type of retirement account is involved, i.e., Individual Retirement Accounts (IRAs), 401(k), 403(b), and 457 plans, CalPERS, CalSTRS, Military or Federal Retirements, vested or non-vested retirement plans, profit-sharing plans, deferred annuities, tax-sheltered annuities. The list goes on, and it is necessary to know the exact type of retirement plan in order to comply with the qualified and complex rules governing each different retirement account.
Each retirement plan is unique in its requirements, how it is governed, and the required rules for division at divorce of the retirement plan. Division of retirement plans at divorce also must comply with the Employee Retirement Income Security Act of 1974. (ERISA). Most retirement plans at divorce need to be divided with a family law court-ordered Qualified Domestic Relations Order, commonly referred to as a QDRO. Federal laws prohibit certain types of retirement plans from paying benefits to anyone other than the participant unless the retirement plan administrator has been directed to do so under a DRO. Family Law Center attorneys can assist you with division of your retirement plans at divorce and help with QDRO’s and DRO’s.
A retirement plan can be one of the most important, and often largest, asset that divorcing couples will split at the time of divorce. Divorcing parties need to be vigilant about the division process in order to protect their community property interest.