How divorce may impact a retirement account

| Dec 24, 2019 | Divorce

A divorce could have implications for a Michigan spouse’s retirement plan. Generally speaking, any money accrued in a retirement account during the course of the marriage is considered to be marital property. However, there is no guarantee that the account will be split in a 50/50 manner. If a qualified plan is being divided, it needs to be done under the terms of a qualified domestic relations order.

Otherwise, an individual may be required to pay penalties or income taxes on the cash that he or she receives. A couple may be able to decide for themselves how to divide a retirement account and when proceeds should be transferred from one account to another. This may be preferable because a person generally loses control of how assets are divided when a judge has to make a ruling.

If a couple had a prenuptial agreement, its terms may dictate how a retirement account should be split or if it is considered marital property at all. Those who are planning on getting divorced may benefit from having their attorneys help them better understand the process of doing so. This may be preferable to getting information online.

There may be many factors that go into the property division process. For instance, the spouse who made more money during the relationship may agree to cede a larger portion of marital assets to the spouse who made less money. Individuals who contributed more to a bank, retirement or brokerage account may be given a larger share of those assets in a divorce settlement.