Depending on a couple’s age, financial situation, and marriage duration, retirement assets may be divided or simply left alone in the event of a divorce. Since no two families are alike, divorcing spouses should seek counsel from a family law attorney before writing checks or closing any accounts. The following is a look at what can happen to two types of assets following a split:
Much like a jointly owned home, most retirement accounts are split between the spouses in the event of a divorce. Even if only one spouse’s income (and employer contributions) made up the account, it may still be considered joint property in the eyes of the law. This is often the case if one spouse contributed to the account while the other took care of the couple’s children full time. However, New Jersey law allows retirement accounts to be split following an “equitable distribution” standard, as opposed to just dividing the amount in half.
Certain retirement accounts do not have to be split in the event of a divorce. For instance, if the couple married later in life and entered the union with their own separate 401K accounts, the court will generally not consider these assets joint marital property. Similarly, if the spouses signed a prenuptial agreement outlining which accounts belong to whom, the contract will generally override any “equitable distribution” that may have otherwise taken place regarding retirement savings. Please note: withdrawing money from these accounts without a formal court order my carry serious tax penalties, so you should consult with your lawyer about your legal options for obtaining judicial orders regarding retirement assets.
Navigating New Jersey’s tax and family law policies requires experience. Bergen County divorce attorney Walter K. Schreyer has been helping with divorce matters for almost four decades. If you have a question about dividing your retirement accounts with your former spouse, call our office today at (201) 383-4256 to see how we can use our experience to help your case.