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Retirement Accounts and Divorce

Retirement Accounts and Divorce

Retirement accounts (including IRAs, 401(k)’s, and pensions) can be a difficult asset to deal with in your divorce. Retirement accounts, unless granted a non-marital exception, are marital property just like any other property. Therefore, retirement accounts can become a source of contention for a divorcing couple, especially if only one spouse has a retirement account. Often, the individual holding the retirement account feels that the account belongs solely to him/herself. However, in Minnesota, because retirement accounts are seen as marital property, that’s not the case. retirement accounts in divorce

What Happens to Your Retirement Account during a Divorce?

As marital property, retirement accounts in a divorce must be divided fairly and equitably by the court.  

1. First off, the retirement account must be valued.

  • For many accounts, this is simply the value on the statement.
  • For things like pensions, which involve a stream of income, often in the future, an expert appraiser is needed to properly provide a value of the account.

2. Once the retirement account is valued, the couple then needs to divide the account.

  • If the spouse with the retirement account has enough other assets to give to the spouse to balance out the account, then s/he could offer those assets instead. 
  • If the spouse with the retirement account does not have enough other assets to give, then s/he may need to give money to the other spouse from the retirement account. (If this is the case, the other spouse’s share of the retirement account may need to be conveyed by what’s called a Qualified-Domestic-Relations-Order, a”QDRO” (pronounced “quad” “row”).
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