As with all marital property, marital equities in retirement benefits must also be divided between the parties in a divorce decree.  The percentage amount each party is to receive, or in some cases the specific dollar amount, must be determined.  If the parties reach an agreement, they set the amount each will received from any given account.  If your case proceeds to Trial, the Judge will determine who gets what and how much.

Once the Judgment for Dissolution of Marriage has been entered–by agreement or Trial, each of the parties’ interests vest but you don’t necessarily “have” the money.  The accounts have to be physically divided.  Because the retirement accounts are being divided pursuant to a divorce decree, there is no early withdrawal “penalty” and neither of you are taxed on the transfer.

It is a relatively straightforward procedure to divide funds in IRA accounts, Roth or Traditional.  Typically the parties can do this by themselves without the aid of an attorney or additional formal Order of Court.

Pension plans, defined benefits plans, 401(k) accounts and many other retirement ventures must be divided pursuant to Court Order.  This Order is either a Qualified Domestic Relations Order or Qualified Illinois Domestic Relations Order depending on the type of plan.  Despite language in the Judgment granting each party a percentage of these plans, the account is not severed until the QDRO or QILDRO is approved by the plan administrator, entered by the Court, and recorded by the Plan.

To schedule your consultation or to discuss this issue further, please call me @ 630.409.8181.