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Your Rights to Retirement Assets

McCarter | East PLLC June 1, 2023

Retirement written on a jar of coins held by old manDividing up marital property is a common part of divorce. You and your spouse may or may not agree on who should get the house you just built, the antique desk you found on your honeymoon or the wedding china. In the end, you will either reach an agreement or the judge will decide.  

These are assets you accumulated while you were married. Retirement assets, however, can be far more complicated to divide. You should know that all or a portion of them will be considered marital assets and as such, must be divided as well.  

Our family law and divorce attorneys at McCarter | East PLLC can help you get your fair share of retirement assets. If you live in Murfreesboro or Manchester, Tennessee, and you are thinking about getting a divorce or have been served a divorce petition, we can walk you through the process and uncover all of your options.  

How Does the Court Divide Up Property in Tennessee?

Tennessee is an equitable division state, so the marital property is divided fairly rather than equally. There is a distinction. The judge renders a decision on what is fair, based on a number of factors, including: 

  • the length of time you have been married; 

  • each spouse’s contribution to the home and/or the education of a spouse; 

  • earning capacity; 

  • age and health of each spouse; 

  • economic position when the property is divided; 

  • lifestyle during the marriage; and,  

  • how much separate property each spouse has, which is not subject to division.  

The division of assets in Tennessee is not always black and white. There are shades of gray when it comes to retirement assets.  

How Do Retirement Assets Factor Into Property Division? 

Retirement assets are linked to employment, which makes them belong to the employed spouse. The spouse and their employer may be contributing to a 401k or IRA. A military spouse will be earning a military pension. A spouse who works in a government position is likely contributing to a retirement plan. Other employers may provide a defined benefit or defined-contribution plan. A spouse may be contributing part of every paycheck toward an annuity or savings for retirement.   

There may be an assumption that a spouse’s 401k, pension, annuities, IRA, or other retirement assets are separate property belonging only to that spouse. That assumption is incorrect. Although a portion of those assets may be separate property, any contributions or interest earned during the marriage are marital assets.   

A spouse’s right to retirement assets during a divorce is unquestionable. After all, one spouse contributed or earned income for those assets using marital money intended for both spouses to share in retirement. Retirement assets contributed to and earned prior to the marriage are, indeed, separate property. That earned after the date of marriage is marital.   

In the case of military, government, and some other pensions, the division of retirement assets is somewhat formulaic, which makes the process less complex.   

Do I Need a Qualified Domestic Relations Order (QDRO)?

A qualified domestic relations order (QDRO) is a tool presented usually in a divorce agreement that states you have rights to the other spouses’ retirement assets.  

A QDRO is a court order that assigns the ex-spouse as an alternate payee once the primary payee begins drawing on their retirement. The alternate payee spouse, therefore, receives all the same recognition as a retirement plan participant as the other spouse does.  

Of course, there are income tax implications for most retirement plans. Taxes on income drawn from retirement funds must be paid by the person who receives the income. Therefore, each spouse bears their own tax liability on the income they draw.  

Turn to McCarter | East PLLC for Help

The equitable division of marital property is complicated for many divorcing couples, but the division of retirement assets is usually complex. Having the guidance of an experienced family law attorney who knows what you are entitled to will vehemently protect your rights. 

If you live in Murfreesboro or Manchester, Tennessee, we can protect your right to your fair share of all marital assets in a divorce. We have been doing it for clients for decades. Contact us at McCarter | East PLLC to schedule a time to talk about the legal guidance and support we can provide to you. Divorce is rarely easy, but having us on your side will help.