Dividing Your Retirement Assets In An Illinois Divorce
Last updated on January 2, 2024
Divorcing spouses are sometimes surprised or dismayed to learn that their retirement accounts are not their own. Regardless of whose name the account is in or who made the larger paycheck contributions, qualified plans and retirement investments are considered marital property. That collective “nest egg” is subject to the Illinois laws of equitable distribution in a divorce.
The actual math of dividing retirement assets can get fairly complicated. It is often necessary to commission a Qualified Domestic Relations Order (QDRO) to value the retirement portfolio and apportion it for purposes of property division. Our experienced lawyers at Taege Law Offices are well-versed in the nuances of QDROs and how to account for retirement savings in the broader divorce settlement.
How Are Retirement Savings Divided?
Virtually all retirement investments are subject to divorce. Our law firm caters to many high net worth clients who have large and diversified retirement portfolios, which may include:
- 401(k) or other employer-sponsored plans
- Roth or traditional IRAs
- Private or government pensions
- Deferred compensation such as stock options
- Profit-sharing plans
- Annuities and life insurance policies
- Income-generating rental properties
If retirement accounts are relatively simple and relatively equal, the parties may agree to simply each keep their own accounts. But complex portfolios typically demand a formal inventory and valuation of those assets through a QDRO, a court order specifying how retirement assets are to be divided in divorce.
The Qualified Domestic Relations Order (QDRO)
A QDRO accounts for many factors. What is the estimated total value of the assets at the date of divorce? What is the projected value of the different assets at retirement? What will be the tax implications of distributions or early withdrawals from those retirement accounts once you are divorced? Our lawyers help you sift through all these considerations to make sure that your best interests are reflected and protected.
Once retirement assets are valued, the QDRO essentially issues shares to each spouse – not necessarily 50-50 – and a third-party plan administrator oversees the eventual distributions. It is critical to address retirement assets properly on the front end, as omissions or miscalculations during divorce proceedings could shortchange your retirement income or subject you to avoidable taxes in retirement.
Contact Chicago Divorce Lawyers Who Understand Retirement Assets
Our core clients are high earners and high net worth couples who need sophisticated representation to assure a fair and accurate division of their marital estates, including their retirement nest eggs.
To schedule a free, confidential consultation with one of our divorce attorneys, please call 312-667-7706 or contact our firm online. Taege Law Offices serves the Chicagoland area, including Cook, DuPage, Lake, Will and Kane counties.
