What will happen to your retirement savings or pension in a divorce?

On Behalf of | Jul 10, 2024 | Divorce, Military Divorce

Divorce can bring big changes to your vision of the future. Unfortunately, these changes may also involve your retirement. What should you know about how the court divides retirement accounts, pensions and other benefits in a Washington divorce?

What happens to your retirement accounts in divorce?

Washington is a community property state, and both spouses have a claim to all property and debts acquired during the marriage. This includes the contributions you made to 401(k)s, IRAs and pension plans during the marriage.

Courts often use a document called a Qualified Domestic Relations Order (QDRO) to split up 401(k)s and IRAs. A QDRO lets you take money from a 401(k) or similar account, split it, and then put it into the non-employee spouse’s retirement account (usually an IRA) without any penalties.

Splitting up a pension can be trickier than dividing a 401(k). How the court divides a pension in Washington can depend on how long you were married and what the pension’s terms are. They use a QDRO for this too.

During the divorce process, you should also consider not just what these accounts are worth now, but what they will likely be worth when you retire. Taking into account things like growth and interest can help ensure that you receive your fair share.

What happens to military retirement benefits?

Divorcing a military spouse brings extra challenges. According to the Uniformed Services Former Spouses’ Protection Act (USFSPA), courts can award part of a military spouse’s retired pay to the civilian spouse during a divorce. However, there are some extra rules to follow. You should seek guidance from an attorney with experience in military divorce to ensure that you take these regulations into account.

One important rule is the 10/10 rule. For a civilian spouse to get direct payments, the military spouse must have served at least 10 years during their marriage. If this is not the case, the court can still split the retired pay, but the civilian spouse won’t get the payments directly from the Defense Finance & Accounting Service (DFAS).

It’s also crucial to remember that disability pay cannot be split in a divorce. Other military benefits, such as base privileges and commissary access, might change based on how long you were married and other specific rules in the USFSPA.

Divorce is challenging, and dividing out retirement benefits can be one of the biggest challenges you face. You should understand how the court handles retirement accounts and benefits. With the right information and help from professionals, you can handle these issues better and work towards a fair and balanced outcome in your divorce.