How Are Retirement Accounts Divided?
A divorce will affect several aspects of your life, including your retirement plan. As the most valuable item a couple can share, the court can order a retirement plan be divided by the divorcing spouses.
In Illinois, the monetary value of a retirement account accumulated before a marriage, does not come under the guidelines of marital property.
However, according to the law, the amount accumulated post-marriage in the retirement account belongs to both spouses.
In other words, during a divorce, part of the account may be subject to a division, along with other aspects the couple shares.
How the Retirement Account Can Be Split
You can only split a retirement account once its value has been determined. Once that is done, you can handle it in one of two ways:
Buy it Out – If your spouse is not employed, you can buy them out with other assets. Even though you will get to keep the entire retirement account, if its value decreases later, you cannot recoup losses.
Split the Account When you Retire – This option is not used as much because of the high level of complexity involved. If you and your spouse decide to split the account when you retire, you will need to file paperwork and get a court order called a Qualified Illinois Domestic Relations Order or QIDRO. The order determines the percentage the account will be split into when you and your spouse retire.
The spouse that does not have a pension or retirement account has two options to ensure they receive their share. One is through a separate interest QIDRO, which bases the retirement amount on their quality of life. The second is called a shared interest QIDRO, which ensures they receive benefits throughout their lifetime. The latter should also come with survivorship protection, which can ensure they keep receiving the amount – even if the account owner, i.e. their spouse, passes away.
If you and your spouse are getting divorced and are unsure how to split your retirement account(s), act now before it is too late. Get in touch with the Law Office of Fedor Kozlov and we can assign an attorney who specializes in family law to your case. We are dedicated when it comes to fair and honest representation and will ensure your rights are not violated whether you are the account owner or not. Get in touch with us in Schaumburg, IL, by calling 847-241-1299.