What Happens to Retirement in Divorce?

Divorce impacts property ownership, with retirement assets being among the items factored in the divorce process. New York is an equitable division state, meaning that marital assets must be divided fairly and equitably between each spouse. Marital assets can include financial accounts, real estate,

What happens to retirement in divorce? That answer will involve the other marital assets available to be divided, and other factors. If you have concerns about how your retirement savings will be affected by a divorce judgment, you should seek the skilled guidance of an experienced divorce lawyer. When your financial future and retirement accounts are at stake, you want an attorney with a proven background handling such issues. To learn more about how divorce affects retirement, contact the dedicated divorce lawyers at Colwell Law today.

Understanding Property Division in New York Divorce Cases

New York divorce law under New York Domestic Relations Law § 236 requires courts to order equitable distribution of marital property. Marital assets typically include property acquired by either partner throughout the marriage. Courts can distribute assets in ways to make sure each spouse is on fair financial footing after divorce is finalized. To do this, courts will analyze items such as real estate owned by the couple (regardless of how they are titled), financial accounts, investments, and retirement accounts. Whether you are approaching retirement or not, retirement accounts, pensions, 401(k) accounts, and other savings will be included in the overall analysis.

Retirement benefits that you accumulate during marriage are considered marital property under state law. Retirement funds earned before marriage are generally considered separate property and will not be subject to division with your ex.

Retirement accounts subject to division can include:

• IRAs
• 401(k) accounts
• 403(b) accounts
• Pension plans
• Profit sharing plans

These and other investments designed to provide security during retirement can be divided during the divorce process. Due to the stakes involved, you will need a knowledgeable divorce attorney at your side to protect your retirement.

Dividing Retirement Funds in a New York Divorce

State law follows an established formula when dividing retirement accounts during divorce. This formula was originally created by the New York Court of Appeals in Majauskas v. Majauskas. Under the Majauskas formula, courts will calculate the non-owner spouse’s portion of a retirement account by considering the total number of months that contributions were made to the account before and after the marriage began. Courts will then multiply that fraction by a percentage (typically 50%) to decide how much money the non-owner spouse should be entitled to. Whether an account is in a defined contribution plan (such as a 401k) or a defined benefit plan (such as a pension) can also impact the formula and calculation.

When calculating the equitable distribution of retirement accounts, courts can consider factors such as the length of the marriage. Some divorcing couples prefer to negotiate settlements on these issues instead of leaving matters to a court’s calculation. In some cases, it can be simpler to leave one retirement account entirely with its owner, if other assets exist to equitably divide all property between a couple. Whether you are taking these issues to a judge or working toward a settlement with your spouse, a knowledgeable divorce and retirement attorney can guide you forward with confidence.

Reach Out to a New York Divorce Attorney to Learn More

What happens to retirement in divorce? In New York, retirement accounts will be impacted by divorce under the state’s equitable distribution laws. With so much at stake, you would trust a local divorce lawyer at Colwell Law to help you understand the process and pursue a favorable outcome. Call our law office now to schedule your consultation.