Pensions, Defined Contributions and Divorce

This plan is one in which the contributions to the plan are known (defined). The amount of money to be distributed upon retirement is unknown and is depends upon the manner in which the yearly contributions have been invested, and the investment growth experienced over the years.

Example: The employee and/or the employer contributes yearly into the plan a fixed percentage of the employee's earned income each year. The money contributed to the plan is used to purchase stock, bonds, mortgages, certificates of deposit, treasury notes, etc. The value of these investments, and the interest generated thereon, will be distributed to the employee in one lump sum upon retirement. Upon receiving this lump sum distribution, the employee usually purchases an annuity which provides him with a specific monthly income for life.

How Defined Contribution Plans are Valued

The value of a benefit under a Defined Contribution Plan on any date is the sum of the market values of all investments in the plan on that date. The services of a pension appraiser normally would not be required to determine the value of this type of plan, unless a coverture fraction needs to be applied to the value or opposing council needs confirmation of the value. In most cases, the administrator of the plan can advise the employee as to the market value of his share of the investments in the plan on any specific date.

Typical Scenario:

On April 1, 1996, Mr. and Mrs. Jones separated. Mr. Jones had been enrolled in a Defined Contribution Plan. The benefit he is entitled to receive has vested but not matured. On June 1, 1996, you request from the plan administrator, the value of the plan as of April 1, 1996. The administrator replies that Mr. Jones' share of the plan was worth $40,000. For equitable distribution purposes, the present value of Mr. Jones' plan on April 1, 1996 was $40,000 unless a coverture fraction is applicable.



Suggested Reading
Pension Issues in Divorce Pension Issues in Divorce
When couples get divorced they must decide how to divide their property. Retirement benefits (pensions) often form a substantial part of the parties' total marital estate and many times are the largest single marital asset afforded the couple. Similar to other assets, pensions are typically divisible in cases of divorce to the extent that they are acquired during the period of marriage.

Download Now


Recent Related Blog Posts
    All Retirement Account Blog Posts

Related Article Archives
Property & Debt Division
Property Valuations
Tax Aspects
    All Article Archives

Related Categories
Divorce, Dollars & Debt
Divorce Financial Planning
Taxes & Divorce
    All Categories
Related Forums
Financial Aspects
Pensions
Property & Debt
Tax Aspects
    All Forums

Resources & Tools

Bookstore Promotion Discount

Start Your Divorce Online Start Your Divorce
Several Options to Get Started Today.
Divorce Tools Online Divorce Tools
Keeping it Simple to Get the Job Done.
Divorce Downloads Download Center
Instantly Download Books, Guides & Forms.
Divorce and Custody Books Discount Books
Over 100 of the Best Divorce & Custody Books.
Negotiate Online Negotiate Online
Settle your Divorce and Save.
Custody and Support Tracking Custody Scheduling
Make Sure You Document Everything.
   
LARGEST ASSETS -- The two largest assets that a middle-class couple divides in a divorce are the marital home and their pensions.

Easily Connect With a Lawyer or Mediator
Have Divorce Professionals from Your Area Contact You!
Enter Your Zip Code:

 

Online QDRO Preparation

Online QDRO Preparation
QdroDeskTM. provides family law attorneys, their clients, and pro se filers an instant, easy, accurate, and affordable way to prepare Qualified Domestic Relations Orders (QDROs), the appropriate settlement agreement language, and processing instructions. And does it all online, with an easy to use, question-and-answer format that has made QdroDeskTM. an industry leader.
 

Online Pension Valuations

Online Pension Valuations
PensionAppraisalDeskTM uses a mathematical, web-based calculation software that gives family law attorneys, their clients, and pro se filers an instant, easy, accurate appraisal of the present value of pension benefits for equitable distribution upon divorce.

View Property & Financial Resources in Our Online Bookstore

Guarantee Official PayPal Seal Facebook Twitter Versign Secure Site
Limited Offer Women's Rights Manual For Divorce
Cover Price: $55.95
Your Price: $29.95
You Save: $26.00

"The Absolute Best Investment in Your Divorce"

Men's Rights Manual For Divorce
Cover Price: $55.95
Your Price: $29.95
You Save: $26.00

"Uncover Your Options and Unleash Solutions"