What happens to retirement accounts and pension benefits?

Retirement accounts and pension plans includes any of the following: defined benefit plans, defined contribution plans, 401(k) plans, state and federal government retirement or pension plans, private employer benefits, and some military retirement benefits. Retirement and pension plans may be regulated by federal and state law and by policies of the plan administrator. As a general rule, anything contributed to a retirement or pension plan by either party from the date of the marriage to the date of the divorce is considered marital property.

Generally, if both spouses have made contributions to their retirement account or accrued pension plan benefits during the marriage, each will be awarded the funds in their retirement account and their plan benefits. If one party made a significantly larger contribution to their retirement account or accrued significantly more pension benefits during the marriage, the court will strive to give the other spouse something of equal value, such as equity from the home, cash, or other property. If there is nothing of equal value to give to the other spouse, then the retirement benefits may have to be split.

Spouses may agree between themselves how much of a retirement account each spouse should receive. If the spouses cannot agree to how much each spouse is entitled to, the Utah judge will apply the formula described in Utah Supreme Court case of Woodward v. Woodward, 656 P.2d 431 (Utah 1982): multiply one-half of the value of the account by the number of years the parties were married and divide by the number of years the employee has worked. For example, if the account has a value of $200,000, and the parties were married for 10 years and the husband worked for 20 years, the wife's share would be $50,000.

Other factors affect this formula, including the date of separation, or whether one of the spouses has done something unreasonable, such as spending, destroying, or giving away marital property. This is called “marital waste.” In situations where marital waste has been committed, a court may reduce the guilty party’s share of the property and assets by the amount that they have wasted.

If a retirement account is to be split or transferred to the other spouse, then a special order, separate from the divorce decree, called a Qualified Domestic Relations Order, or QDRO (pronounced kwădrō) must be signed by the judge. The person who administers the retirement account or pension plan cannot divide an account or pay benefits to a spouse who did not contribute to the plan without a QDRO. Once a QDRO is signed by the judge and approved by the plan administrator, the plan administrator will divide the account or pay the benefits according to the QDRO.

For more information about Qualified Domestic Relations Orders, call Fair Price Lawyers today at (801) 999-0104 to speak with a Utah family law attorney.