Pensions and Retirement Accounts - An Overlooked Type of Marital Property
If you are handling your own divorce, marital property that can be easily overlooked includes a pension, retirement, profit sharing, or a deferred compensation plan. Maryland law gives each spouse a right to an equitable distribution of all property obtained by either party during the marriage, including pensions and retirement assets. This means you may have a right to a share of your spouse’s pension if it was earned during the marriage.
Over the years, the value of pension and retirement assets can be worth far more than household furnishings or a car.
Read the law: Md. Code, Family Law § 8-205(a)
How Pensions and Retirement Benefits Are Divided During Maryland Divorce
If the Court determines that pension or retirement benefits are marital property, the Court has the authority to transfer interest in the benefits to distribute property during the divorce equitably. The factors the Court will use to decide whether a spouse is entitled to a share of pension or retirement benefits are:
- each party’s contributions to the family, both monetary and nonmonetary
- property values and interests held by each party
- economic circumstances of the parties at the time of the divorce
- cause of the parties’ estrangement
- duration of the marriage
- age of the parties
- physical and mental health of the parties
- how and when retirement assets were acquired, and by whom
- any alimony awards
The Court can also consider other relevant factors it believes are appropriate to ensure the fair and equitable distribution of the couple’s property. If, after considering these factors, the Court believes it is fair and equitable to divide the retirement assets earned during the marriage, the Court can award either spouse an interest in the assets held in the other’s name.
Read the law: Md. Code, Family Law § 8-205(b)
Learn more about Marital and Non-Marital Property in Maryland.
How do I know if I am entitled to a share of pension or retirement benefits?
Understanding, proving, and dividing pension benefits and retirement accounts in divorce can be challenging. It requires a thorough understanding of Maryland property law and federal tax law. If the benefits are from a military pension, it could also require an understanding of military laws that affect the distribution of these accounts. You can begin by answering the following questions:
- Does your spouse currently have a pension, retirement, profit sharing, or deferred compensation plan with their current employer?
- Does your spouse have a pension, retirement, profit sharing, or deferred compensation plan with a former employer?
- Does (or has) your spouse worked for:
- the federal government?
- the state government?
- a county or local municipality?
- a school system?
- a unionized employer?
- the military?
If you answered “yes” to even one of the above, you may be eligible for a share of the benefits. Given the complexity involved, you should consult a lawyer specializing in this type of case. While you may be concerned that you do not have enough money to have a lawyer, even if you decide not to proceed with your claim, knowing what you might be giving up is important, as this is a potentially valuable marital asset.
If you and your spouse have agreed to split a pension or retirement benefit plan, or the Judge has ordered you to do so, you'll need to prepare a special kind of order known as a Qualified Domestic Relations Order (QDRO) that tells the plan administrator to divide the funds.