Marriage means not just spending the present with someone but also planning for a future with them as well. Many married couples look forward to their retirement years, for example. They imagine traveling together, doting on the grandchildren and fixing up their home. They can also generally expect to maintain a higher overall standard of living because they share a household and can combine their retirement savings and other assets during a time when they will live on a fixed income.
However, despite careful planning, many couples in West Virginia choose to divorce rather than to remain married during their golden years. Divorce can impact a couple’s retirement savings in significant ways.
Retirement savings are often subject to division
A growing minority of engaged couples choose to clearly outline what will happen to their resources if they divorce by negotiating a prenuptial agreement before they get married. However, for those without such clear guidelines already in place, there can be a lot of confusion and concern about protecting retirement assets during a divorce.
Some people will jump to the conclusion that their retirement savings are separate property because they hold them in an account through their employer. Even if only one spouse ever contributes to the account, they will have used marital income to build the account balance. Therefore, contributions to the account during marriage are typically subject to division as marital property under West Virginia law.
If divorcing spouses can’t agree on how to share their resources, a judge will divide their assets equitably, which means fairly. Details about the marriage will influence what a judge believes would be appropriate, and they can order the division of the actual account or use its overall value to guide what they do with other assets. If one spouse keeps the marital home, for example, the other spouse’s share of equity might offset their interest in the retirement account.
The good news is that people can divide even tax-deferred accounts that are subject to penalties for early division without losing a portion of the account balance. Using a qualified domestic relations order (QDRO) makes it possible for people to preserve as much of their retirement savings as possible during a West Virginia divorce.
The closer someone is to retirement age, the more likely they are to worry about what will become of their retirement savings. Identifying the factors that most matter for one’s sense of security post-divorce may benefit people in the early stages of preparing for marital dissolution.