Divorce can put a damper on many aspects of former spouse’s lives, in many ways. However, what happens if a retirement plan is involved? Today we look at many questions regarding retirement plans and the effect that divorce has on them. Nobody wants to lose out over a divorce, so read some of our helpful tips as we answer your important questions.
If you are married, does this make your spouse an automatic beneficiary to a retirement plan? Yes, under the Employee Retirement Income Security Act (ERISA), if the owner of a retirement account is married when he or she dies, the spouse will receive at least 50% of the money. This is the truth no matter what, even if somebody else is the designated beneficiary. Unless the spouse has completed a Spousal Waiver and another person is listed as a beneficiary, nothing will change.
What steps should be taken before a divorce? Before a divorce, you should always get a summary plan description of the employment-related retirement plans to find out more information about your pension and 401(k). If you have a lot of money in your 401(k), it will not be worth as much as if it were sitting in, say, a CD. This must all be taken into consideration when you decide to value these aspects before divorce.
How are 401(k) and IRA balances split after divorce? You can award it to one spouse or divide it. In many states, they will view the balance on the date of the marriage as the spouse’s property and everything after that will be subject to division; however, not every state handles things this way, which is why you must speak to an attorney.
What happens if you started saving for retirement before you were even married? Sometimes this will affect whether or not all of the money will be considered as “marital property.” These are things to think about in every relationship, as some people may put in money prior to marriage, contribute during the marriage, but then a divorce happens and changes everything.
When you get divorced, what will happen to your pension plan? To some extent, you can offer to “buy out” the spouse. In other cases, you will have to give them a share of the benefits. In many cases, during a divorce the parties will choose to divide the pension by a court order that is 50/50 or another division.
How will it affect my Social Security Benefits? The truth is, it all depends on the time surrounding the marriage. You must be married for 10 years for one spouse to avail themselves to the Social Security. This is, of course, if the spouse does not have work credits that exceed half of the other spouse’s.
Are you going through a divorce and have important questions? Some of these retirement benefits could affect the rest of your life, so it is a good idea to be prepared. Call us today for more information. At The Law Offices of Amy M. Montes, we care about your case!
