A retirement account may often be one of the most substantial assets accumulated during a marriage. When going through a divorce in Norfolk or Virginia Beach, you need to understand the various types of retirement accounts that must be divided as part of the property settlement. Hiring an experienced Norfolk family law attorney can help protect your rights and ensure you receive a fair share of the retirement accounts or pension accumulated during your marriage.
Types of Retirement Accounts That Must Be Divided in a Virginia Divorce
There are several different retirement accounts and pensions that your spouse and you may have. A skilled family law lawyer can help you divide them and complete the specific requirements, such as entering a Qualified Domestic Relations Order (QDRO) to transfer retirement assets. Here are common retirement accounts in Virginia divorces:
401(K) Plan
A 401(k) plan is a popular retirement account offered by many employers. This retirement plan allows employees to contribute a portion of their salary on a pre-tax basis, which grows tax-deferred until withdrawal. In a divorce, a 401(k) plan is subject to equitable distribution, meaning the court will determine a fair division based on various factors, including the length of the marriage and the contributions made by each spouse.
403(B) Plan
Similar to a 401(k) plan, a 403(b) plan is designed for employees of certain nonprofit organizations, public schools, and tax-exempt organizations. Employees contribute to a 403(b) plan on a pre-tax basis, and the account grows tax-deferred until retirement. During a divorce, a 403(b) plan is an asset that must be considered as part of the property settlement.
Individual Retirement Account (IRA)
An individual retirement account, commonly known as an IRA, is a personal retirement account that individuals can establish. It allows individuals to contribute a certain amount annually, which can grow tax-free or tax-deferred depending on the type of IRA. In a divorce, an IRA is also considered a marital asset.
Pension Plan
A pension plan is a retirement plan sponsored by an employer that provides a regular income stream to employees after retirement. The value of a pension plan is typically based on factors such as the length of employment, salary, and years of service. In a divorce, a pension plan is subject to division, and the non-employee spouse may be entitled to a portion of the benefits accumulated during the marriage.
Federal Civil Service Pension
For individuals employed by the federal government, the Federal Employees Retirement System (FERS) may provide them with pension benefits based on their years of service and salary. Another retirement benefit they may have that needs to be addressed in a divorce is a federal Thrift Savings Plan (TSP). It is a defined contribution plan similar to a 401(k).
Military Pension
Military pensions are retirement benefits earned by individuals serving in the armed forces. The Uniformed Services Former Spouses' Protection Act (USFSPA) allows military pensions to be split during a divorce.