Divorce doesn’t just result in the division of homes and bank accounts; it often requires splitting up long-term assets like retirement accounts, pensions, and 401(k) plans. For many people, retirement savings represent years or even decades of hard work, so it is natural to wonder whether your spouse is entitled to a portion of your benefits. The article below explores how retirement assets are handled under New Jersey’s equitable distribution system. Continue reading and consult with an experienced Bergen County property division lawyer to secure skilled representation during your divorce.
Are Retirement Benefits Marital Property?
Under New Jersey law, any property or asset obtained during a marriage is generally considered marital property, regardless of whose name is on the account. This includes wages earned, homes purchased, and contributions made to retirement accounts while married. In contrast, however, assets acquired before marriage or through inheritance or gifts are generally separate property, meaning they will not be divided by the court.
Retirement accounts such as 401(k)s and pensions can be considered marital assets if contributions were made during the marriage. Only the increase in value during the legal relationship will be subject to property division. For example, if you started your 401(k) before your marriage, only the growth and contributions during the marriage will be divided between you and your spouse. Any contributions you or your employer made before the marriage are typically considered yours alone.
It is important to note, however, that the commingling of assets can result in separate property becoming marital. For example, if you roll over a separate IRA into a joint account with your spouse, it will likely be subject to equitable distribution.
Is My Spouse Entitled to a Portion of My Retirement in NJ?
New Jersey law requires that all marital property be divided equitably, meaning fairly, though not necessarily 50/50. Courts consider a variety of factors when deciding what’s fair, including the length of the marriage, each spouse’s income and earning potential, age, health, and contributions to the marriage, among other things.
Even if one spouse did not directly contribute financially to the retirement account, their role as a spouse, homemaker, or caregiver can still entitle them to a share of the marital assets. Retirement benefits accumulated during the marriage are generally divided between spouses. This includes employer-sponsored plans, individual retirement accounts, military and government pensions, etc.
How Are Retirement Benefits Split in an NJ Divorce?
Before division, the court must determine the value of all retirement accounts. The marital portion of the total retirement benefits can be decided by examining the date of the marriage and the date of filing for divorce, the value of the account at the start and end of the marriage, and any growth or contributions made during that timeframe.
Once a fair split is determined, the court can order a Qualified Domestic Relations Order (QDRO) to allow the division of certain retirement plans without triggering tax penalties or early withdrawal fees. Certain accounts, like IRAs, may not require a QDRO, and transfers can occur based on the divorce decree.
This process can be confusing, so it is important that you acquire the help of a skilled attorney. Reach out to a lawyer at Feitlin, Youngman, Karas & Gerson, LLC today to discuss your situation and obtain legal representation.
