In New York, retirement assets, including 401(k)s, pensions, and IRAs, may be deemed marital property and therefore subject to the state’s equitable distribution statute. As such, understanding whether or not your spouse will receive a portion of your retirement, it’s necessary to understand that this will depend on a number of factors, including when the funds were acquired, how long you were married, and whether or not you have a QDRO.  If you’re thinking of getting a divorce in Suffolk County, Westchester County, or anywhere in New York, you might have questions about what will happen to your retirement account. Our knowledgeable law firm has all the answers you need! Read on to learn more about this topic, or speak with a Property Distribution Attorney in Bohemia, NY for individualized legal counseling.

Are Retirement Accounts Divided Between Spouses in a  Divorce?

Many spouses find the division of assets to be the most challenging part of the divorce process. Any assets acquired by either spouse during the marriage are legally considered marital property. New York courts use the equitable distribution model for asset division, meaning all marital assets are divided fairly but not necessarily 50/50 between both parties.

If either spouse acquired retirement funds during the marriage, then they’re technically marital property. Therefore, retirement plan accounts, such as 401(k)s and IRAs, are usually divided between both spouses in a New York divorce. Because division laws can vary considerably by state, it’s critical to understand that New York’s equitable distribution rules specifically apply to pensions, 401(k)s, and IRAs during a divorce.

New York courts will consider a variety of factors when determining how retirement assets should be divided. These decisions can significantly impact the long-term financial security of each spouse. In many New York divorces, only the portion of retirement income earned during the marriage is subject to distribution, while benefits accumulated before the marriage typically remain separate property.

What Types of Retirement Accounts May Be Subject to Division in a New York Divorce?

  • 401(k)s
  • Traditional IRAS
  • Roth IRAs
  • Deferred compensation plans
  • Government retirement plans
  • Military retirement benefits
  • Pensions
  • SEP and SIMPLE IRAS

When Is a Retirement Account Considered Marital Property?

  • Contributions to the plan made before marriage are generally deemed separate property
  • Contributions made during the marriage are generally considered marital property
  • Employee contributions accumulated during the marriage may also be subject to division
  • Growth and appreciation of funds deemed marital assets may also be subject to division
  • Commingling assets can result in complications when classifying property for division

Factors Considered by the Court During Equitable Distribution

Spouses can choose how these assets are divided themselves, often with the help of a divorce lawyer or mediator. There are many benefits to making your own divorce decisions, but it’s also important to seek legal help for these complicated proceedings. If spouses cannot come to an agreement on their own, a judge in divorce court will have to make the final settlement.  The judge will consider a large number of factors, including:

  • The length of the marriage
  • The income and earning capacity of each spouse
  • The value of the marital property
  • Each spouse’s contribution to the marriage
  • If either spouse sacrificed their career during the marriage
  • Existing marital agreements

What Is a QDRO and Do I Need One?

If you’re planning on dividing a retirement account in a New York divorce, there’s a good chance you’ll need a Qualified Domestic Relations Order (QDRO). This is a legal document that allows spouses to successfully split retirement account funds without facing tax consequences or other penalties.

A QDRO is often used to divide qualified retirement accounts during a divorce, as it instructs the retirement plan administrator on how the benefits held in the account should be distributed between spouses.

How Does a QDRO Work?

A QDRO is defined by the IRS as a “judgment, decree, or order” that legally recognizes a spouse’s right to receive all of or a portion of retirement benefits. As such:

  • A QDRO applies to specific, employer-sponsored retirement plans
  • It can help reduce early withdrawal penalties and unintended tax consequences
  • The order must comply with the retirement plan’s requirements and federal law
  • The administrator of the retirement plan must approve the QDRO

Retirement Plans That Typically Require a QDRO

  • 401(k)s
  • 403(b)s
  • Pensions
  • Profit-sharing plans

Plans that typically do not require a QDRO and are instead settled through a divorce agreement include both Traditional and Roth IRAs.

Contact an Experienced Suffolk County Divorce Attorney Today

Are you considering filing for divorce in New York? If so, you might be seeking a dedicated divorce attorney who can guide you through this difficult process. Look no further because our highly experienced legal team is on your side every step of the way! Contact the Law Offices of Susan A. Kassel today for an initial consultation.