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How Are Pensions Divided Upon Divorce?
Maryland Courts use different methods to divide pensions between spouses, depending on the type of pension.
Upon divorce, the Court can transfer ownership of an interest in a pension, profit sharing, 401(k), IRA, stock option or other deferred compensation plan owned by either spouse.
For pension plans with a present value (e.g. 401(k)), the Court may order a portion of the account transferred to a qualified account for the other spouse.
For pension plans without a present value (e.g. government pensions with monthly benefits upon retirement), the Court may divide the pension by a formula: total years of marriage during employment divided by total years of employment. Under this formula, the non-employee spouse receives a percentage of the benefits if, as and when the employee does, rather than immediately. The Court may also award survivor benefits payable on the employee spouse's death.
Maryland law requires equitable distribution of property in a divorce. The court determines a fair award of property and debt. Unless the couple can reach a settlement, the court divides the marital property, pension, retirement, profit sharing or deferred-compensation plans. The court considers contributions of each party, the well being of the family, the property value, the economic circumstances of each spouse as well as current situations such as age, mental state, the duration of the marriage, and the interest each party has in the property.
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