What Happens To My Retirement Accounts In Divorce?

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In divorce, one of the most contested issues is property division. You may believe certain assets belong solely to you, but in reality, they may be shared with your spouse. Dividing property becomes especially complicated when it involves retirement accounts. If you worked during your marriage, you may wonder what happens to your retirement savings after divorce.

To understand how retirement accounts are divided, it’s essential to first grasp how property is typically categorized and separated during divorce in Virginia.

Property Categorization in Virginia Divorce

In Virginia, property is classified into three distinct types:

  1. Separate Property
  2. Marital Property
  3. Hybrid Property

Separate Property

Separate property is entirely yours and is not divided between you and your ex-spouse, with few exceptions. According to Virginia law, separate property includes:

  • Property acquired by either party before the marriage,
  • Property received as a gift or inheritance from someone other than the spouse during the marriage,
  • Property acquired during the marriage in exchange for separate property, provided it is maintained as separate.

For instance, a car you purchased with your own money before the marriage would typically remain your separate property.

Marital Property

Marital property includes assets acquired during the marriage, regardless of whether they are in both spouses’ names or just one. It also includes any property that isn’t considered separate. In most cases, courts presume that marital property is jointly owned and will divide it equitably, though not always equally, between both spouses.

Hybrid Property

Hybrid property consists of both marital and separate components. Common examples include:

  • Income generated from separate property,
  • Commingled assets (such as a home purchased with both separate and marital funds),
  • Retirement and pension accounts.

For instance, if you used separate funds for a down payment on a marital home, and that home appreciated in value during the marriage, it may be classified as hybrid property.

Retirement Accounts

Retirement accounts are often considered hybrid property, especially if they include contributions made both before the marriage and during the marriage. The portion accumulated during the marriage is classified as marital property, meaning your ex-spouse is likely entitled to a share.

Example of Retirement Account Division

Suppose you contributed to your retirement account for 25 years, with 5 years of contributions before marriage and 20 years of contributions during the marriage. When dividing the account at divorce, the 20 years of contributions made during the marriage (plus interest) are considered marital property. If the court awards your spouse 50% of the marital portion, they would receive half of the contributions made during those 20 years.

To avoid penalties for early withdrawals when dividing retirement accounts, your attorney can help obtain a court order (such as a Qualified Domestic Relations Order, or QDRO) to ensure compliance with the account’s rules.

Conclusion

Dividing retirement accounts is just one of the complexities that arise during divorce. Whether or not retirement savings are involved in your case, it’s crucial to work with a knowledgeable family law attorney who can guide you through the process and protect your interests.

At the DiPietro Family Law Group, our experienced attorneys are ready to help you navigate the divorce process and secure the best possible outcome. Call us today to schedule a consultation at (888) 530-4374.