What will happen to my retirement plan after a divorce?

On Behalf of | Dec 14, 2021 | Divorce

Many Salem residents have some of their wealth wrapped up in a 401(k) or other retirement plan. For some Oregonians, their employer-sponsored or individual retirement plans may be among their largest assets.

Naturally, if they are going through a divorce or legal separation, people are going to want to know what might happen to these assets. After all, the outcome may affect one’s long-term goals and plans for retirement.

Retirement plans can be marital property subject to division

Like other states, Oregon’s laws will treat defined contribution retirement plans as martial property that is subject to a division in the event of a divorce.

Generally speaking, any contributions and the return on the investment acquired during a couple’s marriage is subject to a fair and equitably split as determined by the family law judge.

A person has a better shot at arguing that her retirement plan should be separate if she earned the funds prior to marriage, but this is not a guarantee.

A person who has questions about how his retirement plan might get divided should consider speaking to an experienced Oregon family law attorney.

Dividing a retirement plan requires several steps

Unlike other assets, tax-protected retirement plans cannot simply be divided between spouses without negative tax consequences. The couple will have to prepare what is called a qualified domestic relations order, or QDRO, for the judge to sign.

They will have to then send the order to the administrator of the retirement plan. If the retirement plan administrator finds the order acceptable, the administrator will divide the fund according to the order’s terms.

QDROs have to be prepared carefully and correctly in order to avoid unnecessary delays or unexpected financial consequences.