Many of us open accounts like 401(k) plans and Roth IRAs with the hope that we stay financially secure well into our retirement. However, a divorce can put this security at risk. Any financial accounts opened or contributed to during the marriage, including retirement accounts, fall under marital property.
Depending on certain factors, Pennsylvania courts may decide to split the contributions you made to this account. Any growth or appreciation of the account during the marriage may also be subject to division. This can be a point of contention in your divorce process for many reasons.
Disagreements on what constitutes fair division
Pennsylvania’s equitable distribution laws mean that courts divide marital assets based on a number of factors, such as:
- How long the marriage lasted
- Each spouse’s income and financial needs
- Contributions to the marriage
- The age and health of each spouse
- Any existing debts
- The standard of living during the marriage
This can lead to disputes, as each party may have different views on what constitutes a fair division.
Conflicting valuation of benefits
Determining the value of retirement benefits can be difficult and often leads to disputes in a divorce. Different accounts, like pensions, 401(k)s and IRAs, have unique methods for calculating their worth and estimating future growth. These variations can cause disagreements between spouses about the true value of these assets.
Financial experts, such as actuaries or analysts, are often needed to ensure the valuation is accurate and fair. However, involving these professionals can increase the time and expense of the divorce process.
How can you protect your retirement accounts during divorce?
Keep detailed records of all contributions to your accounts, noting dates and amounts to identify what is marital and non-marital. If you have a prenuptial or postnuptial agreement in place, look over any terms about dividing retirement accounts. You can also consider possibly trading other assets to retain your retirement benefits.
More importantly, seek professional legal advice. An experienced attorney can advocate for you and negotiate for a division of assets that protects your financial security.
