DuPage County Divorce Lawyer for Dividing Retirement Benefits

Glendale Heights asset division lawyer for pensions and retirement accounts

Attorney for Division of 401(k)s, IRAs, and Pensions in Naperville, Warrenville, and Wheaton

Spouses who choose to get a divorce will need to resolve a variety of financial issues during the process of property and debt division, and in some cases, couples will need to address multiple different types of complex assets. One area that can raise some questions is how to divide retirement savings or pension benefits. Handling these issues properly is crucial, since spouses will want to make sure they will have the financial resources they need throughout the rest of their lifetime.

The divorce lawyers of McSwain Nagle & Giese, P.C. understand the financial difficulties that many people go through when getting divorced, and we are dedicated to ensuring that your rights and financial interests are protected at all times. We have over 65 years of combined experience, and we can explain the best ways to resolve matters related to your retirement benefits or other valuable marital property.

Division of Retirement Accounts

If either spouse placed savings in retirement accounts during their marriage, these accounts will be considered marital property. Retirement accounts may include 401(k)s or IRAs, and in addition to the amount withheld from an employee's paycheck and deposited into these accounts, these funds may include employer-matched contributions that will also be considered marital assets.

In most cases, the division of retirement savings is fairly straightforward. Whether the balance of an account is divided in half or other arrangements are negotiated between spouses, funds in a retirement account under one spouse's name can be withdrawn and transferred to the other spouse. However, the proper procedures must be followed when doing so to ensure that a spouse will not be subject to taxes or penalties for early withdrawal of retirement funds.

When transferring money out of a qualified retirement plan such as a 401(k), a Qualified Domestic Relations Order (QDRO) should be used. A "transfer incident to divorce" should be used for non-qualified retirement plans such as SIMPLE IRAs, Roth IRAs, or SEPs. The spouse receiving these funds can then roll them over into their own account.

Division of Pension and Retirement Benefits

Spouses who work in certain public or private positions may earn benefits that will be paid out after an employee's retirement. These may include pension benefits, low-cost health insurance, or executive retirement benefits such as deferred compensation plans or supplemental executive retirement plans. As with other marital assets, retirement benefits should be fairly and equitably divided between divorcing spouses.

Determining how to divide pension benefits can sometimes be difficult, since the amount of benefits that a spouse will be eligible to receive may not be known at the time of divorce. These benefits will typically be based on the amount of time a person worked in a pension-eligible position and the average amount of income they earned throughout their career. The portion of these benefits that the person's ex-spouse will be able to receive will depend on the amount of time the person was married while working in a position where they earned pension benefits. 

When addressing the division of pension benefits, it will first be necessary to determine what percentage of these benefits would be considered marital property. The ex-spouse will typically be able to receive half of the marital portion of pension benefits for as long as these benefits are paid. During the divorce process, a QDRO may be created to specify how pension benefits will be divided. If a spouse earned pension benefits as an employee of the state of Illinois, a Qualified Illinois Domestic Relations Order (QILDRO) must be used. For employees of the federal government, a Court Order Acceptable for Processing (COAP) may need to be used to divide government retirement benefits.

Contact Our Carol Stream Property Division Attorneys

Retirement accounts or benefits are often among the most valuable assets owned by a married couple, and determining how to divide them during divorce can often be a complex matter. Our lawyers will make sure your financial interests are protected when addressing this and other marital property. Contact McSwain Nagle & Giese, P.C. today by calling 630-407-1200 to schedule a free consultation. We provide legal help to clients in Wheaton, Glendale Heights, Naperville, Glen Ellyn, Warrenville, Carol Stream, Winfield, DuPage County, Kane County, Cook County, Kendall County, and Will County.

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