What Happens to Retirement Plans During an Illinois Divorce?

 Posted on June 12,2019 in Division of Assets

One of the most complicated parts of the divorce process is often the division of martial property. We generally think of marital property as physical items like fine art, collectables, or vehicles. However, these are not the only assets which must be divided. Retirement assets like pensions and 401(k) accounts must also be addressed during an Illinois divorce. Due to their nature, these assets cannot simply be sold and the proceeds split between divorcing spouses. According to Illinois law, there are certain steps that must be taken to ensure that retirement accounts are divided fairly during a divorce.

Valuing a Pension for the Purposes of Divorce

There are two major factors which influence how a pension is handled during a divorce. First, a determination must be made about whether the pension is marital property or separate property. In Illinois, only marital property, or shared property, is divided between divorcing spouses. Marital property generally includes property which is acquired by either spouse during the course of the marriage. However, it can also include comingled assets which started out as separate property but then became mixed with marital property. Often, the value of the pension that accrued throughout the marriage is deemed marital property and the portion of the pension present before the marriage is considered separate property.

The second factor which influences how retirement accounts are divided during divorce is what type of retirement plan it is. Some pensions are “defined contribution” plans which involve a specific amount of money being taken out of a person’s paycheck each pay period which will go into the retirement account. Defined benefit plans, on the other hand, involve employer-provided payments during retirement. Defined contribution plans are often much easier to value than defined benefit plans.

Qualified Illinois Domestic Relations Order

After you have found the value of your retirement accounts, you will need to draft a document called a Qualified Domestic Relations Order (QDRO) to be approved by the court. This document allows an alternate payee to receive a portion of your retirement funds. In Illinois, you may also need a Qualified Illinois Domestic Relations Order (QILDRO). QILDROs are used when a person getting divorced has a pension plan from working in a public sector job such as teaching or governmental service. A qualified Illinois divorce attorney will be able to help you determine what types of documentation you need and how to file these documents.

Contact a Naperville Divorce Attorney

If you are getting divorced in Illinois, contact an experienced DuPage County property division attorney from Pesce Law Group, P.C. for help. Call us at 630-352-2240 to schedule a free consultation today.

Sources:

http://www.ilga.gov/legislation/ilcs/ilcs4.asp?ActID=2086&ChapterID=59&SeqStart=6000000&SeqEnd=8300000

http://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=004000050K1-119