Retirement savings often make up the biggest chunk of money couples save during marriage. So when divorce happens, it’s natural for both spouses to worry about what will happen to these accounts. Knowing how courts decide to split retirement accounts can help you prepare for what comes next.
Factors that affect retirement account division
Wisconsin aims for fairness rather than a strict and equal 50/50 split. The state courts consider several key elements when dividing marital property, even retirement accounts. In particular, how long the marriage lasted plays a major role. Longer marriages typically result in more equal splits.
The state treats property acquired during marriage as belonging to both spouses equally. But since retirement funds can start before marriage, continue during marriage and even after legal separation, the court will examine this timeline closely.
401(k) plans and the QDRO process
When splitting 401(k) plans in a Wisconsin divorce, courts use a special document called a Qualified Domestic Relations Order (QDRO). This paper tells the company managing the 401(k) how to give part of the account to the non-owning spouse. The QDRO helps you avoid paying early withdrawal fees and immediate taxes. Wisconsin courts usually divide only the money added to the 401(k) during the years you were married.
IRAs and their unique division rules
IRAs work differently than workplace retirement plans. You don’t need a QDRO for these accounts, but your divorce papers must include specific details. You can transfer IRA money between spouses without tax penalties if you handle it correctly. Your divorce agreement needs to clearly state exactly how much each person gets from each IRA.
Pension plans and their complexities
Pensions create special challenges because they:
- Often include money earned before and during marriage
- Need experts to figure out their actual value
- Usually pay out in the future rather than right now
- Require special paperwork with detailed formulas
Wisconsin courts typically split only the pension benefits earned while you were married. Depending on your situation, you might get your share now as a lump sum or later as payments.
Ensuring a stable post-divorce financial future
Handling retirement accounts correctly during divorce helps secure your money for later years. Sharing complete information about all retirement accounts is crucial to ensure fair division.
Working with an experienced family law attorney also helps you avoid mistakes that could cost you money in taxes or penalties. The right paperwork protects both you and your ex-spouse, making sure each of you gets what Wisconsin law says you deserve.
