Pensions and Marital Property
Key Points
  • Pensions and retirement accounts can be considered both separate and marital property which is subject to distribution in a divorce.
  • The marital portion of any pension or retirement plan is subject to distribution in a divorce; anything that was in a retirement account prior to marriage is that person’s separate property and not subject to distribution.

The pensions of both spouses earned during the marriage are marital property and are subject to division and distribution in divorce. Suppose Sam married Susan five years after he began his employment at ABC, Co., and now 20 years after they married, Sam and Susan divorce. Those benefits Sam earned as a single man before his marriage to Susan are Sam's separate property; those he earned in the 20 years of his marriage are marital and subject to division and distribution. The same routine applies to any pension benefits Susan earned at her employer, XYZ, Corp.

Even when the employee-spouse makes no contribution to his or her pension plan, the pension plan is marital property.

In most equitable distribution states (41 of the 50), premarital pension rights (such as Sam's first five years with ABC) must be separated from marital pension rights (Sam and Susan's 20 years of marriage). In these cases, courts use a coverture fraction, which is also called the Time Rule. In this, a mathematical formula is used to calculate the percentage of the pension distributed to the nonworker spouse, who is usually the wife. In a coverture fraction, the denominator is the employee-spouses total working period (25 years in Sam's case); the numerator is the married years of earning the benefit (20 years for Sam and Susan). In this routine, the benefit times the coverture fraction times the percentage attributable determines the amount paid to the to the alternate payee, the noncontributory wife, Susan.

In the cases of Sam and Susan, classification merely establishes that of his 25 years of accumulated pension rights at ABC Co., 20 years are martial and subject to distribution.

Another consideration in pensions is vesting. Some plans provide for incremental ownership of any company contributions over a period of his or her employment, often 10 years. After this period, the employee is said to be 100 percent vested, with a 100 percent claim against any contributions in his or her account or in the plan. The unvested interest in the plan is that portion to which he has a claim after he or she has been employed for a period defined in the vesting schedule.

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
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.
GOOD LEGAL ADIVCE -- The division and distribution of pensions often becomes very complicated, and these issues probably generate more appeals and reversals on appeal than any other issue in equitable distribution. Woman must learn how to ask the right questions when facing the distribution of pensions and retirement plans.

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.
Guarantee Official PayPal Seal Facebook Twitter Versign Secure Site