Women's rights after divorce as far as their former spouse's pension can be difficult to understand, even for lawyers. Federal and state laws determine how this important asset should be split when a marriage breaks down. It would be a mistake to simply assume that your legal counsel will be looking after things automatically. Before you sign a divorce agreement or go to a hearing, you need to educate yourself to make sure you get the money you are entitled to.
Women's Rights After Divorce: Pension as Marital Property
In a divorce, the pension plan is considered a marital asset. When its value is considered, it may be the largest item that needs to be negotiated between divorcing spouses. If you or your spouse have the following kinds of benefits, they may be divided with other marital property in a divorce:
- Individual Retirement Accounts
- 401(k) Plans
- Company Pension Plans
- Military Pensions
- Government Employee Retirement Plans (Federal, State, or Local)
Right to Pension Requires Special Procedures
When a woman who is going through a divorce wants to be awarded a share of her husband's pension plan, it's not enough to indicate to her husband and the Court that she is making a claim for this asset. A court order will need to be issued directing that the pension plan administrators release a certain portion of the plan to the wife. In the case of a private pension plan, she will need the judge to issue a Qualified Domestic Relations Order (QDRO).
Preparing the QDRO
If the wife is making a claim for a share of her husband's pension, then her lawyer will probably be the one preparing the document. To get all the paperwork completed properly, the lawyer needs to be familiar with the federal and state laws that govern splitting pensions on divorce. In addition, the wife's legal counsel must find out how the rules for the pension plan in question work and the procedure to follow to submit the QDRO to the pension administrators.
Individual Retirement Accounts and Divorce
The rules for splitting Individual Retirement Accounts (IRAs) are different from other types of pension plans. This investment is easier to split than a pension plan; it can be divided between the parties under a court order or as part of a divorce judgment.
Tax Free Transfers
Under federal legislation, funds in an IRA can be transferred to the other spouse under certain circumstances:
- The transfer is one of the provisions set out in a divorce agreement or decree.
- The money is transferred from one person's IRA directly into the other spouse's IRA.
Both conditions must exist to transfer the funds without their being subject to federal taxes, plus a penalty of 10% of the amount transferred. If you receive money from your spouse's IRA as part of a divorce settlement in cash, you have 60 days in which to deposit the funds into your IRA before you will need pay the penalty.
Pensions and Survivor Benefits
One item that should be covered in any divorce agreement or decree is the issue of survivor benefits. A company pension plan often pays 50% of the benefits to a surviving spouse for his or her lifetime. A former spouse can receive this payment, but only if the issue is specifically addressed in the agreement or the decree.
If the husband dies first and the issue of survivor benefits was missed for whatever reason, the former wife will not be entitled to receive payments from the husband's pension plan.
For the purposes of this article, it was assumed that the issue of dividing pensions was part of women's rights after divorce. Nowadays, a growing number of women earn more than their husbands do and thus have their own pension plans that are subject to division on divorce. The issues here could just as easily apply in a situation where a husband wants to ask for a portion of his wife's pension plan.