Retirement Benefits in Divorce

For over a decade, attorney Anthony J. (Tony) Vetrano, at the King of Prussia law firm Vetrano | Vetrano & Feinman LLC, has been preparing court orders that transfer retirement benefits in a divorce. Our clients can be individuals but are often other lawyers who are more comfortable having such orders prepared by someone more familiar with this specialized work.

Many divorces call for the transfer of retirement benefits from one spouse (or former spouse) to another.

Such transfer can occur only via a court order that complies with the law. The order is submitted to the retirement plan’s administrator who then transfers the benefits in accordance with the order.

Examples of the persons whose retirement benefits can be transferred are: private company employees, state government employees, federal government employees, military personnel, and railroad employees. For those who divorce later in life, transfer of benefits is also an important concern. Different retirement plans are governed by different laws. And, in each case, the law is extensive and complex. Preparation of the court order requires familiarity with such law.

At divorce, retirement benefits are often part of the marital estate. At times, the retirement benefits are shared between the divorcing spouses and divided by Qualified Domestic Relations Order (QDRO) so that there are no taxes or penalties incurred. Other times, one spouse may retain the retirement benefits earned during the marriage and the other spouse will keep other assets such as the house or an investment account. As part of the property division agreement between the divorcing couple, interests in retirement plans owned or distributed are waived. That is to say, that after the divorce, neither spouse will have any interest in the other’s retirement plans other than provided in the marital settlement agreement.

After the divorce, it is important for participants in retirement plans to check the beneficiary designations on their retirement plan assets to determine that such designations continue to meet their needs and intentions. Even though there is a waiver of the benefits in the divorce, at death, the beneficiary designation will control. Therefore, at death, the person named as beneficiary of the retirement plan benefits will receive the benefits even if that person is a former spouse who waived any rights to such benefits. In other words, the administrator of the pension plan must pay the benefits to the person named in writing by the plan participant. This is the 2009 holding of the United States Supreme Court in Kennedy versus DuPont Savings and Investment Plan.

Participants in retirement plans, pension plans, 401 (k) plans, etc. should check the beneficiary designations submitted to the retirement plan administrator on a regular basis to make sure that the person named is the intended recipient of the retirement benefits upon death.

Issues involving the marital estate and retirement benefits in divorce can be complex. The attorneys at Vetrano | Vetrano & Feinman LLC in King of Prussia, Pennsylvania have the experience to know how to deal with such issues. We help clients through difficult divorce and family law matters while pursuing their best interests.

Contact Anthony J. Vetrano for a consultation on any concerns you have about retirement benefits in divorce.