How to Protect Your Retirement Accounts in a Divorce

Have you thought about how your marital assets will be distributed after your divorce? New York uses equitable distribution to divide marital property. The court will divide the property according to each spouse’s needs. That is why the law is called equitable distribution.

It is easy to divide marital property that both spouses equally contributed to during the marriage, such as cash in a shared bank account or the value of the marital home. But what about assets you initially acquired before your marriage and you continued to grow during the marriage, like individual retirement accounts (IRAs), Roth IRAs, 401(k) plans, SIMPLE 401(k) plans, simplified employee pension (SEP) plans, or employee stock ownership plans (ESOPs)?

If you have questions about divorce and retirement accounts, the divorce attorneys at Stepanian Law Firm are here to help. You deserve to have your retirement contributions protected from the reach of your soon-to-be-ex-spouse.

Contact our firm today, and let our attorneys help you keep your assets after divorce.

a Divorce

How Is a Retirement Account Split During a Divorce?

With retirement accounts and divorce, you and your spouse can decide how to distribute the accounts. It’s common for one spouse to give up a retirement account in exchange for more of another asset. If you agree without court intervention, you can sign a “marital settlement agreement” or “divorce settlement” that contains the details. If you cannot agree, the family court judge will use equitable distribution to divide the assets.

The first step is calculating how much of the account goes into the marital estate. This is usually done through a pension appraisal.

How Will the Court Divide a Pension?

To split a pension, your attorney will order a pension appraisal. This is done with pension appraisal companies. Once the pension is appraised, the pension appraiser will draft a qualified domestic relations order (QDRO) that instructs the pension plan administrator to divide the pension. Once you have a draft ODRO, your attorney will ask a judge to sign it. Upon the signing, you will need to notify the pension administrator or file with the pension administrator the QDRO. Once the spouse, who received the pension from their employer, retires, the pension administrator will provide your share of the pension on a monthly basis.

What About an IRA in a Divorce Settlement?

You may not need a QDRO to divide an IRA. You can request a direct transfer, or “a transfer incident to divorce.” The account owner will have the IRA plan administrator transfer or rollover the necessary assets directly to the other spouse’s new IRA account. Another option is “renaming” the IRA accounts. The owner-spouse opens a new IRA account, places the other spouse’s name on the old account, leaves the appropriate funds in the old one, and transfers the remainder into the new account.

How We Can Help

At Stepanian Law Firm, we handle many divorces every day in New York. We’ve created solutions for many complex divorce cases with large numbers of assets. If you’re struggling to manage your divorce and retirement accounts, call us today and let us help.


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