Retirement plans are among the most commonly divided financial assets during a Colorado divorce. For average Colorado residents, the retirement plans of both spouses are their largest assets. A common question divorcing spouses ask their Denver, Colorado divorce lawyer is “how does divorce impact my retirement plan?”
Separate assets include all assets belonging solely to one spouse before the marriage, assets a spouse inherits during the marriage, and gifts given to a spouse during the marriage. Joint assets are all assets purchased or accumulated during the marriage, which become part of the marital pool. Colorado’s divorce law requires both spouses to divide all assets they accumulate during their marriage, while they may retain their separate assets.
Many spouses facing divorce believe that their retirement plan is a separate asset; however, in most cases, retirement plans become joint assets during the marriage. Unless the terms of the divorce are already in place through a prenuptial agreement protecting a retirement plan as a separate asset, the plan becomes marital property.
This is based on the premise that one spouse can contribute more to a retirement plan because of the contributions of the other to the household expenses or care of the home and children.
When a retirement plan increases in value during marriage, each spouse has the right to their fair share of the account’s increased value. Our experienced family law firm in Denver can help you on your unique case.
There are several options for dividing retirement accounts like 401Ks, IRAs, or pensions. The division of the accounts under Colorado’s equal distribution laws requires a Qualified Domestic Relations Order (QDRO) from the judge to define the terms of the division between the spouses, either according to their agreed-upon settlement or the judge’s decision.
The following common methods are used to divide a retirement account between the policyholder of the account and the non-participating spouse:
It’s critical to consider the tax implications and penalties of each method of dividing and distributing a retirement account during a divorce.
Remarriage after a divorce does not impact either spouse’s share of a retirement account allotted to them during the divorce. The Colorado court considers each spouse’s share of a retirement account as marital property. Once it’s distributed during the divorce, each portion allotted to each spouse belongs to them regardless of whether or not they remarry.
However, remarriage does impact an ex-spouse’s ability to receive benefits from their ex-spouse’s social security record. Generally, a spouse is entitled to receive social security benefits based on their spouse’s record after a marriage of ten or more years.
Remarrying terminates this right, except under specific exceptions, including for those who remarry after age 60, or those whose subsequent marriage ends.
Many questions arise during the divorce process. The outcome of a divorce has long-term implications for the future of both spouses.
Call the experienced divorce lawyers at Ciancio Ciancio Brown, P.C. for the experienced representation you need to safeguard your best interests throughout the process, including essential counseling on the impacts of divorce on your retirement plan.
