Planning for retirement takes decades, and spouses often make joint sacrifices so that they can live comfortably after they retire. Your retirement savings reflects how much money you estimated you would need to support yourself and your spouse while sharing a home. Some people use tax-deferred accounts, while others have employer-sponsored pensions.
Regardless of how you have set money aside for retirement, the chances are good that you and your spouse have contributed marital income to your retirement savings. What will that mean when you file for a divorce in Indiana?
Some of your retirement savings are likely marital property
Some people don’t even start putting money aside for retirement until they have a family, while others start saving as soon as they start working. It is common for some but not all of a retirement account or a pension to be marital property.
In Indiana, unless you have a marital agreement with your spouse stating otherwise, your income and other acquisitions during the marriage are marital property. All of those assets are subject to equitable division if a couple divorces. A judge will look at both spouses’ resources, income and health, in addition to factors like their unpaid contributions to the household and the length of the marriage, to determine what they think would be a fair way to split up the property.
Any amounts contributed toward a pension or retirement savings account are potentially divisible in a divorce. It does not matter if the account is in the name of one’s spouse or if they started the account before they got married. The balance accrued during the marriage will be part of the property division process.
How do you split a retirement account?
There are numerous concerns that arise when people discuss the division of retirement savings, and one of the more common worries is the idea that the couple will incur penalties by withdrawing from the account prior to retirement age.
Thankfully, if you split your retirement account in accordance with a Qualified Domestic Relations Order (QDRO) approved by the Indiana family courts, you will not have to worry about any taxes or penalties just for dividing the account. The courts will determine what percentage each spouse should receive, and the QDRO will instruct the person managing the retirement account to split it accordingly.
Learning more about property division rules in Indiana divorces can help you plan for a stable future after your divorce.