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How Are Retirement Accounts Addressed in an Illinois Divorce?

Posted on in Divorce

Oak Brook divorce attorney division of assets

You may be surprised to learn that the divorce rate for adults over 50 has more than doubled in the last several decades. Called “gray divorce,” divorce involving older adults often presents unique challenges. One of these challenges involves the division of retirement funds. If you have been out of the workforce for many years, you may be worried about making ends meet without your spouse’s retirement benefits. If you were the main income earner during the marriage, you may have concerns about how much of your hard-earned retirement funds will be awarded to your spouse. Read on to learn about how retirement accounts are divided in an Illinois divorce and how you can obtain the legal support that you need.

Marital Assets Versus Non-Marital Assets

Only marital assets are divided in an Illinois divorce. Non-marital assets, including assets acquired by the spouses before getting married, are not divided. Before a retirement account can be divided, a determination must be made about the account’s identity. Retirement accounts are different from other types of assets because they can be classified as both marital and non-marital. Typically, the portion of the retirement account that a spouse earned before getting married is considered non-marital. The non-marital portion of the account is assigned to the original owner. However, the portion of the retirement account that was earned while the spouses were married is part of the marital estate and therefore subject to division.

Dividing Retirement Funds Through a Qualified Domestic Relations Order

Once a determination has been made as to what portion of the retirement account is a marital asset, the funds may be divided between the spouses. This is typically accomplished through a Qualified Domestic Relations Order (QDRO). A QDRO is a court order that instructs the retirement plan administrator to divide retirement funds. The QDRO may instruct the plan administrator to distribute the retirement funds to the spouses immediately or the spouses may not receive the funds until they retire. If the funds are immediately distributed, the spouses will not be subject to the customary 10 percent early withdrawal penalty.

In some cases, it may make better financial sense for spouses not to divide a retirement account. A spouse who is entitled to a portion of the other spouse’s retirement funds may instead choose to waive his or her right to the retirement funds in favor of a different marital asset of equal value.

Contact a DuPage County Divorce Lawyer

Determining what to do with retirement accounts during divorce is a complicated issue that can have significant financial consequences for both spouses. For trustworthy legal guidance regarding property division during divorce, turn to the experienced professionals at Botti Marinaccio, LTD. We will fight to protect your rights to marital property throughout your proceedings. Call our office today at 630-575-8585 to schedule a private consultation with a distinguished Burr Ridge asset division attorney.

 

Sources:
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-divorce
https://www.thebalance.com/how-retirement-plan-assets-are-divided-in-a-divorce-1289260

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Botti Marinaccio, LTD.

630-575-8585

2015 Spring Road, Oak Brook, IL 60523

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