Retirement assets

finley11Generally, retirement benefits that accrued or were earned before a marriage are separate property, subject to equitable exceptions and based on the facts of each case.  Likewise, a party is typically entitled to 50% of their spouse’s retirement that vested or accrued during the marriage.

Dividing the retirement asset can be done by “offset” of other portions of the marital estate, if available, or a awarding a “deferred benefit”, meaning that you are either awarded a lump sum from a 401K or monthly benefit from a pension plan.

Valuation of a “defined contribution” plan, e.g., 401(k) or profit-sharing, is the account balance in the plan on a given date, such as the date of separation or divorce.  Valuation of a defined benefit plan, e.g., a pension, on the other hand, requires that the right to future monthly payments be discounted to the present-day lump sum value.  This involves accounting for factors such as expected retirement age, mortality, and future income tax liability.

The foregoing is general information only and does not constitute legal advice regarding your specific legal matter nor does it create an attorney-client relationship regarding your matter.