Pensions and Retirement Accounts in Family Law

During marriage, spouses often acquire an interest in pensions (defined benefit plans) or other retirement accounts such as 401(k) and 403(b) plans (defined contribution plans) and private retirement savings such as IRAs.

These pensions and retirement accounts should be included in the equitable distribution negotiations.  These assets can be allocated as a lump sum or paid out over time in fixed periodic payments.  A special type of court order may be entered to require a pension plan to pay monthly benefits directly to a spouse when the employee spouse retires, or as a separate life benefit that can be elected prior to the employee spouse’s retirement. Funds may be “rolled over” funds from one spouse’s account to a separate retirement account for the other spouse. If the right to a pension was acquired partly before the marriage and partly during the marriage, then the nonemployee spouse will be entitled to a partial share known as the coverture fraction. There are special rules for dividing military pensions, federal employee retirement system, civil service retirement system and other governmental pension and retirement plans.  Drafting and processing these division orders (knows as a qualified domestic relations order or QDRO, DRO, COAP, MPDO) require special skill and it may take months to complete the process.