All forms of traditional retirement benefits acquired during a marriage are divisible upon divorce.

Before World War II, most Americans worked without any company-paid retirement benefits, and for this reason, many people literally worked until they died.

At one time, when many Americans worked their entire lives at one company, retirement benefits meant the company pension, a defined spouse was the husband who often elected to collect reduced benefits during his retirement years so that his widow could survivor’s benefits for the rest of her life after he died. In this arrangement, the employee contributes nothing toward his own pension and does not have an individual account in his or her name.

Beginning in the 1980s, however, more and more employers began restructuring retirement benefits around defined contribution plans, wherein both employer and the employee make contributions to a retirement account in the name of the employee. In this routine, the employee manages his or her account and has a greater say in the mix or investments. Very often the employee buys stock in the company.

When defined contribution plans such as the 401(k) first became appeared, the business world trumpeted them, and during stock market runups, the paper gains in these retirement accounts vanish when Enron collapsed as result of its managers’ mismanagement and corruption.

The defined pension plan seems to be headed for extinction because fewer and fewer companies are offering them, and more and more companies are freezing benefits for those employees already covered. In addition, more and more companies are trimming or eliminating retirement medical benefits for ordinary workers.

Retirement plans are said to be qualified when they are covered by ERISA and protected by the PBGC and nonqualified when they are not.

The classification and distribution of retirement benefits earned during a marriage is not difficult, but the downsizing of many large corporations through voluntary and involuntary early retirements has created particular considerations for divorce courts.

In the past generation, millions of American workers have squeezed out the work force early as a result of the continuing restructuring of the economy. Many longtime employees retire voluntarily but not by their own choice, or they retire involuntarily. Retirements under these circumstances may obscure an easy distinction between types of separate property) and what portion are retirement benefits earned during a marriage (and marital property).

Generally, separation pay after a divorce as a result of involuntary retirement is viewed as separate property because they are seen as compensation for lost future earnings. Overall, courts may look at early retirement benefits as compensation for past service if the employee is at a high point in his or her productivity rather than a low one.

Voluntary early retirement by the pension-owning spouse creates the risk that he or she may retire for the bad-faith reasons for a larger share of the retirement pie.

See Retirement.

See also Nonqualified Plan, Pension Plan; ERISA; PBGC.