When you are going through a divorce, one task you must complete is the division of your assets. Along with dividing your property and liquid assets, you must also think about the division of retirement benefits. Most all employee benefits are considered community property in most states in the country and therefore are divisible in a divorce. The following are some things you need to know regarding your retirement benefits and divorce:
Which Retirement Benefits Are Affected in Divorce?
Almost all retirement benefits can be divided in a divorce. Specifically, all pension and cash balance plans, stock ownership, profit-sharing, and 401(k) contribution plans are included in a divorce. Any retirement plans that you have started independently, such as Individual Retirement Accounts (IRAs) will also be dealt with in your divorce.
Are Social Security Benefits Included?
No, in most states Social Security benefits are not included in asset allocation in a divorce. It is separate and will remain with whoever earned them. However, there are some loopholes in which one spouse can easily walk away with more of the other's benefits.
For instance, those who work for the government do not receive the same Social Security benefits according to the SSAs Windfall Elimination Provision. By law, Social Security benefits is not paid to government employees at the same rate as those working in the private sector. They are, however, provided with an additional pension benefit that will compensate for the lack of Social Security benefits.
The problem with a divorcing couple in this scenario is that the spouse that works for the government is allowed to keep any Social Security benefits earned, but the additional pension is allowed to be divided. The other spouse that may work a private job is entitled to his or her SSA benefits and does not have to provide any of that money in the divorce agreement. This then leads to a situation in which one spouse is going to come out ahead financially over the other.
If you are affected in this way, it is best to allow your attorney to help you gain a more fair and equitable division of assets. There are some ways in which you may get more money from your former spouse, although it will depend on your own circumstances. The division of retirement benefits is very complex, so it is vital that you fully entrust this to your attorney. Contact a legal firm, like Kleveland Law, for more.Share