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Schaumburg IRA Division In Divorce Attorney

Schaumburg Pension Division Lawyer

Lawyer Assisting With Dividing Investments and Pensions in Barrington and the Northwest Suburbs

During a divorce, the courts will look to divide marital property equitably between the spouses. In addition to dividing physical property (as well as the marital home), a divorcing couple will also need to determine how to divide any investments made during the marriage, including retirement accounts and pensions.

The first step in this process is determining what portion of any investments will need to be divided. Any contribution made toward these investments during the marriage is considered marital property, but contributions made prior to the marriage or investments received by one spouse as a gift or inheritance are not considered marital property.

Determining the Value of Investments

While investment accounts often have a monetary value, determining their actual value in order to divide them among divorcing spouses is often a complicated matter. Parties may need to retain experts such as accountants, financial appraisers, or pension valuators to determine the actual value of their assets.

Retirement investment plans are one of the most common types of investments to be divided in a divorce, and they generally fall into one of two groups:

  • Defined Contribution Plans - These include plans such as 401(k), 403(b), or IRA accounts which contain a defined amount of money in the name of one or both spouses. While the actual balance of the account changes regularly due to ongoing contributions and the changing value of investment assets, the value of the account is definable at any point.
  • Defined Benefit Plans - This type of plan includes pensions, which will be paid to one spouse upon retirement based on factors such as the number of years worked and the amount of salary the payee earns near the end of their career. Pensions can be especially difficult to valuate, since instead of an immediate defined value, they carry the promise of value to be paid later.

Dividing Investments Equitably

As with other marital property, the courts will seek to divide investments, retirement funds, and pensions equitably, which does not necessarily mean that they will be divided equally. While some defined contribution plans may be split 50/50, one spouse may choose to retain a larger portion of an account and offset the marital portion of that account by allowing the other spouse to retain a larger portion of other marital property, such as real estate.

Determining the marital portion of pension payments can also be a complex matter. For instance, if the couple was married for 10 years, and one spouse contributed to a pension fund during those 10 years, then went on to work for a total of 30 years before retiring, the marital portion of future pension payments will be 33.3%, and the other spouse will be entitled to 50% of that 33.3%.

Following the divorce, the court will use a Qualified Domestic Relations Order (QDRO) to divide and distribute the funds in an investment account, retirement account, or pension fund. A QDRO allows funds to be withdrawn from an account without incurring taxes or penalties. The QDRO will specify when and how the funds will be paid, according to the marital settlement agreement, or, if the couple was unable to reach an agreement, the judge's order.

At Anderson and Associates, P.C., our experienced Schaumburg divorce attorneys help our clients negotiate fair and reasonable settlement agreements that ensure they will be able to maintain financial stability. We can put over 30 years of experience to work for you to determine the best way to divide marital assets and move on with your life following your divorce. Please contact us or call 847-995-9999 to schedule an initial consultation.

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