Retirement accounts can be among a couple’s most valuable assets. During a divorce, that can make them an important part of the property-division process.
The state addresses retirement benefits under its property-division law. However, that doesn’t necessarily mean that spouses will simply split every retirement account down the middle.
Marital assets versus pre-marriage accounts
Retirement accounts are typically considered marital property. Furthermore, the law doesn’t automatically exclude property simply because it was acquired before the marriage.
New Hampshire is an equitable distribution state. The law presumes that an equal division of marital property is equitable. However, the court may determine that equal division would not be appropriate based on certain factors, including:
- The length of the marriage
- Each spouse’s financial circumstances and contributions
- Future earning potential
- The opportunity for each spouse to acquire capital assets
Premarital retirement assets can significantly affect property division and can be considered when determining equitable distribution. P
ensions require a different approach from defined-contribution accounts such as 401(k)s and IRAs. Pensions often depend on factors such as salary, years of service and the terms of the pension plan. However, retirement accounts can be marital property even if they’re not yet vested. There are methods for determining the marital portion of pension benefits and how that portion may be distributed.
There are several ways for addressing retirement assets. One option is to divide the retirement account between the spouses. Another is to allow one spouse to keep the retirement account in exchange for other marital property as an offset. Many retirement accounts require a Qualified Domestic Relations Order (QDRO), a court order used to divide retirement accounts without treating the transfer like an ordinary withdrawal with penalties and tax consequences.
If you are facing divorce, it’s vital to speak with a legal professional who can explain how retirement accounts fit into the property division process and help you pursue a settlement that protects your financial interests.
