Frequently Asked Questions about Divorce Mediation

• How do retirement plans work in a divorce?

   

  The portion of each spouse's retirement plan that was earned during the marriage and the growth of that investment related to that portion is a marital asset and thus subject to equitable distribution upon divorce.  Retirement plans include traditional and Roth IRAs, 401(k)'s, 403(b)'s, 457 plans, defined benefit plans, defined contribution plans, cash balance plans, ESOPs, and SEPPs.  These plans differ in how they are funded and by whom, but they are all marital assets if earned during the marriage.  It does not matter when the funds are withdrawn from the retirement plans.

   

  As an example, a person gets married 7 years after they start working for XYZ, Inc.  Ten years later they divorce and 5 years after that they retire.  So this person has accumulated 22 years of retirement benefits, but only 10 years of it would be considered marital assets (from year 7 to 16), plus the interest/appreciation earned on those 10 years of investment.  As you can imagine, figuring out the value of some of these retirement plans and  investments can be complicated and difficult and subject experts may need to be relied upon.

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