Your Right to Retirement Assets
May 2, 2023
One of the most important issues to work out in a divorce is how assets will be divided between the two spouses, and this will look different in every state and for every couple. Additionally, when you’re deciding upon the division of your assets in Washington, you should pay particular attention to retirement assets since these are often handled differently than other forms of wealth.
If you’re considering divorce or are currently going through a divorce and want to speak with a family law attorney, contact William E. Morgan, Attorney at Law today. William E. Morgan is able to serve clients throughout Grays Harbor County, Washington, including Montesano, Aberdeen, and Hoquiam, as well as the Pacific County cities of South Bend and Raymond.
Division of Property in Washington
For purposes of asset division in a divorce, Washington is considered a “community property” state. This essentially means that any money or assets that are acquired during the marriage belong to both spouses equally, even if only one person did the “earning” or only one name is on the title. For example, if only one spouse works a traditional job, the income they make from their employment belongs to both spouses. This is in contrast to the concept of “separate property,” which is any assets that were acquired before the marriage, after separation, or during the marriage in some cases of inheritance.
When divorce occurs, all assets must be divided between the spouses, and this typically only applies to community property. In some cases, this means a 50/50 split, but a judge can also opt for a “just and equitable” division based on a few factors:
how long the couple has been married
the total amount of community property the couple has
the amount of separate property that each spouse has
whether one spouse will stay in the family home with children
the overall financial stability of each spouse at the time of separation
How Retirement Assets Factor In
One of the most complicated aspects of property division to address is retirement assets, which can include a defined-benefit plan, defined-contribution plan, military benefits, government pension, saving accounts, or traditional retirement plans like a 401K, IRA, or annuities. In Washington, any money earned during the course of the marriage is considered marital (community) property but not that which was earned prior to the marriage.
Qualified Domestic Relations Order (QDRO)
If you’re unable to come to an agreement with your spouse about splitting these assets or you feel your spouse may be trying to hide assets from you, you should contact an attorney right away. However, in any of these cases, to ensure a spouse’s right to retirement accounts during a divorce, you may need to get a Qualified Domestic Relations Order (QDRO).
QDROs are official judicial orders used for employment-related accounts like a 401K or pension, and they formally acknowledge spousal ownership interest in the employee’s plan and name the spouse as an alternate payee. Therefore, during asset division in a divorce, a QDRO requires that a portion of the account be paid out to the named spouse.
Perhaps one of the biggest benefits of using a QDRO is that neither spouse will see any tax penalties for an early withdrawal. That said, the beneficiary must place the funds into another investment account to avoid a penalty.
Understand the Full Picture With an Attorney
If you’re located in Grays Harbor County, Washington, in Montesano, Aberdeen, or Hoquiam, and would like to talk to an experienced attorney about dividing property assets during a divorce, reach out to William E. Morgan, Attorney at Law for help.