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How Divorce Affects Your Retirement in Ohio

By January 5, 2021April 22nd, 2021No Comments

When you and your spouse decide that it’s time to legally end your marriage, there are many factors to consider. Throughout the divorce or marriage dissolution process, you’ll need to make important decisions that carry lasting implications, such as which spouse will keep the family home, which parent becomes the primary custodian, whether you’ll need to establish alimony payments among many other decisions. For older and more established couples, divorces often include hard-earned retirement accounts or pension funds. If you are about to seek a divorce or marriage dissolution, it’s best to work with an experienced attorney who can help you understand your options and guide you towards an equitable outcome. In the meantime, let’s examine how your divorce or dissolution could impact your retirement accounts, and what you can expect from the process.

Understanding Marital Property

In general, when a married couple seeks a divorce or dissolution, the court will determine which assets are considered “marital property,” or assets that may be divided up during the divorce. Marital assets are typically those assets acquired by both spouses together or separately over the course of their marriage—a vacation home purchased together, income, and other shared financial assets. In contrast, separate property applies to assets or property owned by one spouse before the marriage occurred, but it could also apply to an inheritance or gift to one spouse during the course of the marriage. While separate property is usually not divided between divorcing spouses, marital property is assessed by the judge, who then attempts to divide it between the spouses in an equitable manner, which usually means equal. In Ohio, retirement benefits and pensions are considered marital property, meaning they are subject to division by the court.

The Court’s Approach to Dividing Pensions and Retirement Accounts

An Ohio judge will examine each spouse’s retirement benefits, such as IRAs, 401(k) plans, pensions, and deferred compensation when determining equitable division. Similarly, vested pensions are considered marital property, as are unvested pensions in many cases. While it can be challenging to assess the true value of each marital asset, the court tries to encourage the couple to settle on an approximate value of each particular asset. If the spouses cannot settle on an agreed value, they may consult an outside expert—such as an accountant, real estate appraiser, or pension valuator—to assist them.

It’s also worth noting that pre-marriage contributions (and any appreciation in value since acquisition) are typically viewed as separate property and, thus, not part of the division process.

When Divorcing Spouses Share a Retirement Plan

In some cases, a married couple share a retirement or pension plan. In such an event, the couple must complete a Qualified Domestic Relations Order (QDRO), which is a set of written instructions stating that both parties are dividing their pension benefits. This document contains the terms and conditions of the division of retirement benefits, such as how much each spouse receives, when the payments will be paid, the method of payment, and other important instructions. Once completed, the QDRO can be submitted to a plan administrator, who will then ensure that the terms and conditions are respected and fulfilled. (For state plans, Ohio’s Division of Property form must go through court approval.)

Social Security Benefits Within a Divorce

Courts may consider Social Security benefits, but because of federal laws, they cannot be divided in the same way as other retirement assets. However, if one party is entitled to a significant Social Security benefit, sometimes the court will consider this benefit when dealing with the other spouse’s state-based retirement plan since state-based employment earnings can fall outside the social security system.

Setting Aside Retirement and Other High-Value Assets for Children or Heirs

There are other options for moving assets into a trust or other vehicle to ensure that any affected children from the divorce can be taken care of into their future. Your divorce attorney may be able to help with initial guidance and can make a referral to an appropriate estate planning attorney to ensure that assets are placed properly.


For more information about asset division in the West Chester area, contact the experienced and knowledgeable divorce and dissolution attorneys at Garretson & Holcomb, LLC. Call (513) 863-6600 today to get started.

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