Tips Regarding a Husband's Retirement Benefits in a Divorce

by Tom Streissguth

Financial disputes take center stage in many divorces and a court may decide how a couple must divide their assets before parting ways. If a spouse is due retirement benefits, that income may not be payable until well after the divorce is final -- yet the other spouse may have a legal right to a portion of it. Additionally, issues may arise to complicate the process.

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Marital and Non-Marital Property

Marital property is a crucial issue in any divorce. It includes assets such as portions of retirement benefits earned by either spouse after the wedding day. If a husband accumulates any portion of these benefits before the marriage, this would not be considered marital property. Likewise, any portion he earns after the divorce will be non-marital property. However, retirement and pension assets earned during the marriage, by either spouse, are subject to distribution. A marital settlement agreement or the terms of a divorce decree typically direct how the benefits are divided and in what measure.

Plan Statements

Before beginning divorce proceedings, a husband can request summary statements of his retirement accounts or pension plans. Statements provide current account balances and dated breakdowns of his contributions, contributions made by his employer, and withdrawals. They should also show the vested percentage -- the amount the employee is entitled to receive if he should terminate employment immediately. The total balance is not the same as the account's net value to the employee; that depends on the vesting percentage as well as any fees, penalties or taxes that might be incurred when the money actually comes out of the account.

Pension and QDRO

When the divorce is final, the court will issue a Qualified Domestic Relations Order. A QDRO provides an exception to the federal law that protects retirement accounts and pensions for the exclusive benefit of the employee. It covers the division of these assets between divorcing spouses and gives legal instructions to account custodians regarding how they should make payment to the non-earning spouse. The order may also appoint an "alternate payee" for child support or alimony purposes. QDROs must be issued pursuant to a court order. If retirement benefits are addressed as part of mediation or a settlement conference, the terms must carry over into a decree that orders a QDRO for distribution of the benefits.

Social Security Retirement

Social Security benefits are based on the lifetime earnings and payroll taxes of each spouse. If both spouses worked, each would be entitled to their own Social Security retirement benefits. If only the husband worked and paid in, or wife worked but earned a lesser benefit amount, she's entitled to collect on her husband's work record under certain conditions. Their marriage must have lasted at least 10 years, the wife cannot remarry and she must be at least 62 years old. Social Security pays up to 50 percent of the principle worker's benefit to spouses and ex-spouses.