In the typical divorce, the spouses’ retirement plans, pensions, and mutual funds often may be the most valuable assets that they own. As a result, the division of these items of property in a divorce can be a hotly contested matter. Under Washington law, retirement funds that either spouse acquired during the marriage are the community property of both spouses. This means that these retirement funds can be divided as marital assets if the parties divorce.
The only way to divide a retirement plan during a Washington divorce is to use a Qualified Domestic Relations Order (QDRO). A QDRO allows certain retirement funds to be transferred from the spouse who acquired the funds to the other spouse as part of the division of their marital property. Only retirement plans qualified under Internal Revenue Service (IRS) regulations and the Employee Retirement Income Security Act (ERISA) require transfers via QDRO. Other retirement plans, such as military retirement plans or those resulting from employment as a state or federal employee, must be divided differently. The administrator for the retirement plan and the judge presiding over the divorce both must approve the QDRO in order for it to be effective. The spouse who did not originally accumulate the funds only can receive the funds in accordance with the retirement plan’s rules.
Dividing retirement plans can be very complex and the funds can be divided in many different ways. Among other things, it is essential to have a clear value placed on each plan at issue in your divorce. Some of the means of dividing a retirement plan differ according to whether the plan is a defined contribution or defined benefit plan. A defined contribution plan includes contributions to an account by both the employee and the employer; the employee typically must decide how to invest the funds in the account. On the other hand, a defined benefit plan provides for a monthly benefit amount based on the employee’s length of employment and other factors.
The Washington divorce lawyers at Ashby Law are eager to answer your questions and help you understand the ins and outs of both filing for divorce and dividing up your marital assets and debts. As your attorneys, we will focus on how best to represent your interests and achieve the goals that you wish to reach. We have handled countless divorce and family law proceedings over the years, and we will work with you to create the best strategy possible in your case. Call our offices at (509) 572-3700 and learn how we can help you with your Washington divorce, legal separation, or family law case.