For many families, retirement accounts constitute the largest assets to be divided in divorce after the marital home. Making sure the retirement accounts are divided equitably requires planning. Take these three steps when you separate to make sure you are ready for this important component of your divorce:
First: Make a list of each employer of both spouses. Most retirement accounts are connected to employment so knowing where you were both employed throughout the marriage will help you construct a checklist for where to look for retirement accounts.
Pro Tip: If you have your Form 1040 Tax Returns and/or Forms W2 from all of the marriage years, you can also use those documents to determine what years contributions were made to retirement accounts.
Second: Gather statements. At a minimum, you will need the statements from each account from the date of marriage, the date of separation, and the current date. If you cannot locate all of the statements, you have a list to provide your lawyer of what will need to be requested in discovery or by subpoena.
Pro Tip: If you can collect all of the statements throughout the years, you should. That way, you can track whether there were transfers in or out of the accounts.
Third: In Pennsylvania, post-separation contributions to retirement accounts are not considered marital assets so you should keep track of any contributions so that you can make sure they are excluded from distribution.
Next steps . . . . If retirement accounts need to be divided in a divorce, employer-sponsored plans will usually require a Qualified Domestic Relations Order (QDRO). You can learn more about QDROs here. Some IRAs will allow divisions between spouses with Letters of Direction or other forms provided by the plan administrator. Check the website for each plan or call customer service.
More information: Retirement plans can have many different names: 401k, 403b, Defined Benefit, Pension, IRA (traditional or Roth), SIMPLE IRA, SEP, ESOP, etc. Find more complete definitions here.
