What Happens to Our Retirement Savings in an Illinois Divorce?

 Posted on September 14, 2020 in Divorce

Among the challenges of getting a divorce, the division of assets may be one of the most difficult, especially for a long marriage in which you and your spouse have accumulated a significant amount of marital assets. Along with physical properties such as homes, vehicles, and furniture, you will likely also need to plan for a division of financial accounts, including your retirement savings. It is important to understand how retirement accounts may be divided in a divorce so that you can make sure your goals stay within reach.

Are Retirement Accounts Considered Marital Property in Illinois?

Contributions to a retirement account made before your marriage are typically considered non-marital assets in Illinois, so you can usually be confident that those funds will remain in your name after your divorce. However, even when a retirement account is in your name alone, contributions made to the account during your marriage will likely be considered marital property. Along with your other marital assets and debts, these retirement savings will be included in the equitable distribution of property between you and your spouse.

What If I Relied On My Spouse For Retirement?

If you were a homemaker or otherwise unemployed for a significant time during your marriage, you may have relied on your spouse’s income and employment to fund your shared retirement savings. Because these retirement accounts are typically considered marital assets, you have a right to pursue your fair share of them in a divorce. Whether the funds are in a 401(k), an IRA, or a pension, you can negotiate with your spouse or pursue a court order requiring that a portion of the funds are either transferred to an account in your name or disbursed to you at the appropriate time..

What If I Was the Primary Provider in My Marriage?

If most or all of the retirement accounts are in your name, you should be prepared for the likelihood that an equitable portion will be awarded to your spouse in the divorce. However, it is important to take action to ensure that funds are not lost unnecessarily during the transfer process. Assets in an IRA can often be transferred to your spouse’s IRA without penalty, but for assets in a 401(k) or pension, you will need to obtain a qualified domestic relations order (QDRO) in order to legally transfer the funds to your spouse without incurring income taxes or early withdrawal penalties.

Contact an Arlington Heights Divorce Lawyer

At the Cosley Law Office, we have more than 20 years of experience representing clients in divorce proceedings, and we understand the intricacies of the division of retirement accounts and other assets. We will help you work toward a stable financial future after your divorce. Contact a knowledgeable Rolling Meadows divorce attorney today to schedule a free consultation at 847-253-3100.

Source:

https://www.ilga.gov/legislation/ilcs/documents/075000050k503.htm