Pensions and Retirement Assets in a Virginia Divorce
In Virginia a pension (more properly referred to as a “defined benefit” retirement account) is one of the numerous financial assets reviewed and possibly affected by a divorce. Also taken into consideration are “defined contribution” retirement accounts such as IRAs, 401(k) plans, 403(b) plans, and other similar plans. Whether a spouse is already receiving a pension or drawing from other retirement assets, or retirement is still a long way off, it is important to ensure an accurate assessment of retirement assets and to divide those assets fairly during the divorce process.
How Pensions are Split in Virginia
In Virginia, pensions are considered marital property when they were earned while the couple was married. The portion that was earned during the span of a marriage can be divided in several ways. First, the parties can have the “present value” of the pension determined by an actuary service that performs such calculations, and incorporate that value into the overall framework of the asset division. The second method is to agree that the spouse’s share of the pension will be paid to him or her at the time of retirement. This is accomplished pursuant to a court order called a “Qualified Domestic Relations Order,” or “QDRO” for short. A divorced spouse may also be entitled to other retirement related funds such as survivor benefits, which would be addressed in the parties’ agreement or the court’s order, and the QDRO.
Sometimes, a divorcing couple will agree to divide retirement assets differently than a court might order to better addresses their individual circumstances. Even when an agreement can be reached between the parties, it is necessary to ensure that the pension administrator has the Order and legal notice it requires to distribute assets accordingly. In any divorce, obtaining the advice of an attorney well versed in pension division is in your best interest.
How IRAs, 401(k)s, and Other Retirement Assets are Split in Virginia
Division of so-called “defined contribution” accounts can be dealt with in several ways. The value of these accounts may be offset by a transfer of cash or another asset. Sometimes both parties have these accounts, so it makes sense to add up the marital portion of all the accounts and equalize them by way of a transfer from one spouse to another. It is possible, by using a QDRO, to transfer portions of defined contribution retirement accounts from one party to the other without either party incurring any tax consequences or penalties.
Differences in Virginia Retirement Asset Division: Federal and Civil Employee Pensions
Federal government pensions through the Federal Employees Retirement System or Civil Service Retirement System fall under a specific set of federal divorce guidelines. However, Federal pensions and Thrift Savings Plans can be divided in much the same way as private pensions and 401(k) plans. Entities such as the World Bank, IMF, CIA, FBI, and other government and quasi-government agencies often have these benefits which may be divided. Virginia state employees, such as police, firefighters, and teachers, also typically have pensions that must be dealt with as part of the divorce process.
Turn to an Experienced Virginia Pension Divorce Attorney
Whatever your circumstances, it is important to have a Virginia divorce attorney with specialized knowledge of the laws governing division of marital retirement assets, as well as the financial planning intricacies of securing the right division of assets many years into the future. The Virginia pension divorce attorneys at Curran Moher Weis can help you navigate this maze so your financial future is certain and secure. Request a consultation today.