Retirement savings may take several years for married couples to accumulate. However, divorce requires a couple to split their assets, including their retirement funds.
Knowing how the state distributes savings and retirement plans ensures both parties can plan for their individual retirement.
What retirement assets do courts include during distribution?
When splitting assets in a divorce, Connecticut includes all property of each spouse. As this relates to retirement funds, it consists of all money set aside by either spouse both before and during the marriage. Some standard retirement accounts are IRAs, 401Ks, savings accounts and pensions. The state then evaluates all retirement assets and determines how to split them equitably.
How are IRAs and 401K plans split during a divorce?
Employer-sponsored retirement plans, such as IRAs and 401Ks, get distributed to both spouses, regardless of who’s employer paid into the plan. To avoid tax liabilities when removing funds before age 59 ½, spouses should reinvest the money into a personal retirement account instead of keeping the money outright.
Do both spouses receive pension funds?
Another type of marital asset is pensions. While pensions do not pay out until retirement, both spouses may be eligible for their portion of the funds. One option is having one spouse buy out the other spouse’s share, while others might have the managing company distribute funds directly to the other spouse. These funds can pay in one lump sum or monthly payments.
Retirement savings are marital property in Connecticut and get split equitably between spouses during divorce. Knowing the answers to these common questions allows both parties to anticipate what to expect when dividing assets.