How Are Retirement Plans Impacted by Divorce in Illinois?

 Posted on March 14,2024 in Divorce

Anytime a couple goes through a divorce, they need to figure out how exactly they will divide all of their debts and assets. This means they need to consider the bank accounts that they currently use as well as anything they have put away for their retirement. Someone who has been working all their adult life and slowly putting away money to finance their retirement might be concerned that all their hard work was in vain and their spouse is going to take everything. If you are going to get divorced and worried about the fate of your retirement funds, an Arlington Heights, IL divorce attorney can review your specific case and offer insight and guidance for moving forward.

Will My Spouse Get Half of Everything I Have Been Putting Away for My Retirement?

Generally speaking, any assets acquired by either spouse during the marriage will be considered marital assets and will be subject to a division of assets in a divorce settlement. On the other hand, anything acquired before the couple was married will likely be considered nonmarital assets and not need to be divided.

Even if someone began working and contributing to their pension and other retirement funds before they got married, they will likely have continued contributing throughout the marriage, and as such, these funds are frequently considered marital property and subject to division in a divorce.

The specific amounts each spouse ends up with are decided on an individual basis, taking into consideration factors like financial status, future earning potential, and current balance. The court will also consider each spouse’s contribution to how the funds were accumulated. However, since Illinois follows an equitable division approach rather than an equal division, it is not likely that any funds will be split down the middle.

What Does a Division of Retirement Funds Usually Look Like in Illinois?

When spouses in divorce proceedings need to divide retirement funds, they generally use a Qualified Domestic Relations Order (QDRO), which instructs the administrator of the retirement fund to pay out a portion of the fund to an alternative payee, in this case, the ex-spouse. Otherwise, if the spouse in whose name the retirement fund is registered tried to simply withdraw funds early to transfer them to their ex, they will be liable for penalties and taxes.

Contact an Illinois Divorce Attorney

Forming a plan for dividing retirement assets that both spouses find acceptable can be quite challenging. Call A. Traub & Associates at 847-749-4182 to speak with a knowledgeable Arlington Heights, IL divorce lawyer about how best to proceed.