Retirement accounts in divorce actions generally include any number of account types. The following are just a few.

annuities

pensions

401(K) Plans

403(B) Plans

SEP Plans (Simplified Pension Plans for Employees)

IRA (Individual Retirement Accounts)

Both before and during the course of many marriages, retirement accounts are formed and valued. When a divorce action is filed in family court, any and all retirement accounts that were opened during the marriage or appreciated during the marriage come under scrutiny by the family court as potential marital property.

So how do you know if your retirement account could be marital property?

These two examples should be helpful in understanding some basic concepts.

Scenario #1

Jack worked at P&H Electrical. Jack had a 401(K) plan that he invested in. Jack had $23,000 in his 401(k) when he married Jill. During his marriage, Jack continued to contribute to his 401(K) until Jill filed for divorce in Rhode Island 5 years later. At the time they filed for divorce, Jack’s 401(k) had reached $57,000.

Jack didn’t want to give any of his 401(k) over to Jill because she didn’t contribute, but that didn’t matter. During the marriage, marital money from Jack’s income was contributed to the 401(K) and therefore at least a portion of Jack’s 401(k) converted to marriage when he married Jill and later made contributions to that 401(k).

The $23,000 was created by Jack before the marriage, therefore it should be exempt from marital property, as well as any appreciation associated with that $23,000.

However, every dollar contributed by Jack, Jack’s employer (if matching funds), and all appreciation of that money up to the conclusion of the divorce would be considered marital funds subject to division by the family court.

Suppose the total account at the time of the divorce trial is $62,000. After subtracting the $23,000, normally $39,000 would be the spousal share subject to equitable distribution by the court. This would be divided either by agreement or by the presiding judge after a judgment on the merits for a Qualified Domestic Relations Order.

A Qualified Domestic Relations Order is a relatively complex document written by a qualified professional who understands the intricacies of such orders and the various plans that exist. It is a very technical order to write and most domestic relations lawyers will usually refer you to a specialist lawyer who writes these orders on a regular basis.

Scenario #2

Tim and Charlotte have been married for 17 years. Tim has been contributing to a pension provided by his company since their second year of marriage. Tim files for divorce. Charlotte files a counterclaim for divorce and wants half the estimated value of Tim’s Pension when it is distributed.

In the trial it is determined that Tim has 15 years of pension, but that it is not granted until he turns 20 years old. Charlotte’s lawyer argues that they were married for more than half of Tim’s total vesting period and therefore she should receive 50% of her alimony payment when Tim vests her. Tim’s lawyer argues that then Charlotte would get the benefit derived from the last five years of service without being married to him and therefore the request is beyond the reach of the court.

The trial judge determined that the divorce assets should be valued as of the time the final decree was entered, and since Tim would not be granted before the final divorce decree was entered, Charlotte could not be entitled to half. of the payment granted. The court ordered that the value of the pension contributions be determined, and Charlotte received half of the contributions.

The trial judge’s ruling determined that a payment acquired in a pension cannot be divided if it does not exist. If a pension plan has not been consolidated, the pension consists only of the contributions made to the plan and those contributions are the only thing that exists to be divided.