What happens to your retirement savings when you divorce?

When you and your spouse got married, you moved in together and combined finances. You may have bought a house or at least shared the cost of renting one. You probably also started planning for your future, such as adding children to the family and your eventual retirement.

Whether you are close to retirement age or still in the prime of your career, those retirement savings may be a major source of conflict in an upcoming Connecticut divorce. Under equitable distribution rules, spouses in Connecticut have to share the property they acquired during their marriage. That will typically include retirement savings even if only one spouse directly contributed to the account.

How do you split retirement accounts?

Many spouses are able to negotiate a settlement outside of court, which means that you and your ex could be the ones to decide exactly how you split certain property. You don’t necessarily have to divide the retirement account, but its value should factor into other decisions you make.

If you and your ex can’t agree on how to split your property, then litigating the divorce will likely be your best option. A family law judge will look over an inventory of your assets to decide what is a fair way to split them.

Once you have an approved settlement or a court order for property division, you can then draft a qualified domestic relations order (QDRO). This special document, after approval by the courts, allows you to split retirement accounts without incurring any penalties or taxes.

How much of the retirement account can each spouse claim?

In some ways, equitable distribution is a more complex property division process than community property division. Rather than assuming that a 50/50 split is appropriate, equitable distribution requires that a judge first look at your contributions to the marriage, your income and other factors that influence your financial circumstances.

It is impossible to predict exactly how a judge will rule on the property division for your divorce, but you can generally expect that contributions made to a retirement plan during the marriage will be vulnerable to potential division. The more you understand about the Connecticut approach to property division, the easier it will be to advocate for yourself during your divorce.