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How do couples over 50 divide a retirement plan during a divorce?

Delaware couples going through a gray divorce have the option to divide a retirement plan. The family court judges view an employer-sponsored pension fund or 401(k) account as marital property subject to equitable distribution. 

A retirement fund, however, does not generally split in half equally. Property and assets that a couple accumulated together typically divides by what a judge determines as fair, which may not always reflect an equal split. Both spouses, however, have a right to a fair share of a retirement fund’s value because the court views them as equal contributors to the plan. 

Working spouse versus nonworking spouse 

A full-time working spouse contributed income toward a retirement plan that a couple anticipated they would enjoy together. Without the working spouse’s job, the fund may not have existed. The nonworking or unemployed spouse, however, also contributed to the plan. 

The court views a nonworking spouse’s plan contributions as the time and effort invested in maintaining a couple’s household and raising their children. Without that assistance, the working spouse may not have generated enough income to fund the retirement plan. Based on this view, the nonworking spouse may receive a fair share of a retirement fund during a divorce based on shared responsibilities. 

Qualified domestic relations order 

To divide a 401(k) or pension fund, a spouse must request a qualified domestic relations order from the plan’s administrator. As noted by Kiplinger magazine, an individual may fill out the QDRO and, depending on the plan, request cash, an annuity or a percentage of its assets. While each fund has its own method for approving a distribution, federal law requires a divorcing couple to submit a QDRO. 

During a divorce, a nonworking spouse may request financial support such as alimony. Support arrangements could also include expenses for health insurance and housing needs. A nonworking spouse may also have a right to file for Social Security benefits based on a working spouse’s income.