In many divorce cases, the parties overlook the most valuable assets in their marital estate.  No, its not the house.  Retirement accounts are frequently one of the larger assets to be addressed as part of a divorce. Sometimes the account is through one spouse’s employer. Often, one spouse contributes directly through their payroll.

When it comes to this issue, I have good news and bad news for clients. First, the bad news.

In Marriage Income Is Not Mine Nor Yours

Many clients will believe contributions to the retirement account came from their income and therefore should not be a shared asset. Not so.

Unless you had a “Jim-Gross-Bullet-Proof-Prenup” when you got married, the law considers all property acquired during the marriage to be marital property. Retirement income is marital to the extent it is earned during the marriage.  There is no my savings when you are married.  It is all our savings no matter who earns it.

Now, for some good news.

Dividing Retirement Accounts Is Not Always 50-50

To determine who gets what when it comes to retirement accounts, the split is not always equal.

Retirement accounts can be part marital and part non-marital.

The balance of a 401(k) or an IRA and other defined contribution plans at the date of marriage is pre-marital and therefore non-marital property.  So are the interest, dividends and appreciation.

The division of defined benefit plans is more complicated than that and will usually require an actuary to value.