In some cases, the division of the couple’s financial assets in a divorce can extend to accounts that a person may consider to be a personal benefit, such as a retirement account. Under Illinois law, a divorcing spouse may be entitled to part of their spouse’s retirement account in some cases. Just as there are rules and guidelines as to the division of marital property, there are rules and guidelines when it comes to the division of retirement accounts.
The Illinois law on the dissolution of marriages holds that pension benefits and other retirement plans that were acquired after a marriage and before a legal dissolution or declaration of invalidity of the marriage are marital property. As such, retirement benefits are divided under the same rules as other marital property between the parties, regardless of which party worked and had the retirement payments deducted from their pay. The determination of the value of a retirement account or pension benefits is done according to the Illinois Pension Code, which recognizes this qualification of pension benefits as marital property.
Unlike most other marital property that may have distinct marital property characteristics, as it was acquired after the marriage began, there are special considerations as to retirement accounts because the total retirement account may be made up of funds that were contributed before the marriage began. This does not restrict a retirement account or pension benefits from being considered marital property. However, typically the only retirement funds that would be considered divisible as marital property are those that were contributed after the marriage.
People who are awarded portions of retirement benefits may wait until the spouse who was initially to receive payments begins to draw retirement to collect their portion. However, in some cases, a spouse can decide that instead of waiting until retirement, he or she would like to receive a portion of the retirement accounts in the present time, as part of the divorce settlement. This kind of settlement may be possible, although the spouse electing to do this may face tax penalties unless certain exceptions apply.
As with other aspects of divorce and custody, settlements between the parties are possible, where one person may choose to give up marital property in another form in order to avoid having their retirement account divided. In deciding to make this or any other financial settlement in a divorce, it is important to consult with your attorney to ensure that the settlement is both enforceable, and also beneficial to you.
Contact an Experienced Family Law Attorney
If you are considering divorce and would like to find out how the divorce may affect your retirement accounts, reach out to our skilled DuPage County family law attorneys for help with your case.