Divorce involves dividing assets, but in Ohio (and many other states), your spouse is only entitled to property or assets that were either purchased or contributed to during the marriage. This can certainly include retirement benefits and pension plans. In fact, the Supreme Court of Ohio has declared that any and all retirement benefits contributed to during the duration of marriage should be considered marital property. These retirement benefits include plans from employers, the federal government, the state government, or private plans like a 401k. Therefore, the contributions made to the plans during the marriage will be reviewed and divided fairly like all other marital property during a divorce.
How Are Retirement Plans Divided?
There are several ways in which retirement plans might be divided by the court during a divorce. The most common are:
- If there are multiple plans, each spouse may receive half of each plan
- If each spouse has their own retirement plan, money can be transferred from one account to equalize the accounts
- One person can keep their entire retirement package but give up other assets to their spouse, which equal the value of the benefits
How Do I Receive My Share of the Retirement Plan?
A Qualified Domestic Relations Order or “QDRO” is used when dividing retirement or pension accounts. The QDRO is submitted to the administrator of the retirement account and contains the dollar amount or percentage that the spouse is entitled to. This ensures that funds can be transferred to another account without penalties incurred from early withdrawal. And as long as the funds are transferred to another retirement account, no taxes need to be paid on the amount either.
What About Social Security?
Federal law says Social Security benefits cannot be divided in the same way as other retirement plans. Still, Ohio divorce courts may consider these benefits when awarding assets to each spouse. For instance, if one spouse is entitled to a significant social security benefit, the court may not award that spouse any of the state-based retirement plans of the other spouse. The goal is to divide assets fairly.
If you have further questions about how your divorce will affect your retirement benefits, call Garritson & Holcomb today at (513) 863-6600.