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Is My Spouse Entitled to My Pension in a Divorce?  


A divorce is an unfortunate time in anyone’s life, as it signifies the end of a likely long-term relationship and marriage. However, it’s important to understand the financial ramifications of a divorce as you’re going through one. So if you’re in the process of filing for divorce, the fate of your pension is likely at the forefront of your mind. There are a number of different ways that this situation could unfold. Here’s what you need to know.

financial advisor can help you create a financial plan for your needs and goals before and after a divorce.

How a Pension Is Handled During a Divorce

A pension earned by one spouse is usually considered a joint asset, as are other retirement accounts, such as 401(k)s, 403(b)s and IRAs, though state laws govern the latter. Usually, whatever is earned prior to the marriage remains the individual property, while what is earned during the marriage is considered a joint asset.

However, the divisions of pensions in a divorce isn’t always a cut-and-dry situation. For one, unless you are actively receiving a pension (and thus know the exact details of the payment amount and frequency), it can be difficult to pin down its exact value.

Additionally, while a pension is usually considered a joint marital asset, that doesn’t mean it’s always split 50/50. The exact amount varies according to each state’s law and how much of the pension was earned during the marriage. Remember that if you and your spouse signed a prenup protecting your pension, it’ll remain yours.

If you have a military or government pension, these are governed by their own specific set of rules and may not be subjected to the same rules when splitting your assets in a divorce.

The Legalese Behind a Pension in a Divorce

Divorcing couple discusses their case with an attorney

If you have a pension, you’ve likely heard of the Employee Retirement Security Act of 1974 (ERISA). This is the set of regulations that protect pension holders. However, 1984 brought the Retirement Equity Act, which protects spousal benefits as they relate to pensions.

In order to gain access to a percentage of your pension, your spouse would have to specifically ask for their share at the time of the divorce – not at the time of your retirement. This is done via a court order called a qualified domestic relations order (QDRO).

If your spouse is entitled to half or a portion of your pension, it would be withdrawn at the time of the divorce settlement and transferred into their own retirement account, usually an IRA. It’s important to note that with a QDRO, the spouse is exempt from the tax ramifications of receiving their settlement.

State Laws for Pensions in a Divorce

A general rule of thumb when it comes to splitting pensions in divorce is that a spouse will receive half of what was earned during the marriage. However, this depends on each state’s laws governing this subject.

In equitable distribution states, assets (like your pension) are divided fairly – but this doesn’t necessarily mean 50/50. The vast majority of states are equitable distribution states. But there are also a few community property states, where all marital property is simply divided 50/50.

There are only nine community property states – Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Other states, including Alaska, Florida, Kentucky, Tennessee and South Dakota, allow spouses to opt into a community property system.

The Power of Bargaining During a Divorce

If you have a pension and are in the midst of a divorce, don’t just fork over half blindly. You may have a few bargaining chips on your side. First, find out if your soon-to-be ex has a retirement of their own. If it’s comparable to yours in value, it may behoove both of you just to call it even. After all, think of the money you’ll save on lawyers alone.

Second, if your spouse doesn’t have a retirement account that’s equal to your pension, consider other joint marital assets that you may be able to offer them instead. Real estate would be your best choice here. In lieu of splitting your pension, try offering up your former home or another piece of comparable real estate.

Bottom Line

Jar of change marked "PENSION" with a clock

When facing a divorce, your spouse will generally be entitled to some of your pension. However, how much your spouse will receive varies, as the laws governing pensions in divorce settlements vary by state. If you have a pension and are getting a divorce, you can still do things to protect your financial interests. For instance, familiarize yourself with your plan and its details. The more you know prior to settlement, the better. You can also hire an attorney with experience in pensions, or you could consider a QDRO specialist. And lastly, don’t automatically assume that you’ll lose half your pension. This isn’t always the case since most settlements are based on what was earned during the marriage.

Retirement Planning Tips

  • A financial advisor can help you create a financial plan for your retirement needs and goals. long-term retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have free introductory calls with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Whether or not you have to split your pension in a divorce, knowing how far your current savings will get you in retirement can help you plan ahead. SmartAsset’s comprehensive retirement calculator can give you a detailed look at how your savings stack up.

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