How Retirement Accounts Are Divided in Illinois Divorce Cases

 Posted on August 09,2023 in Chicago divorce attorney

When couples divorce, their assets, including retirement accounts, are subject to division. This blog post will discuss how retirement accounts are divided in Illinois divorce cases.

Retirement Accounts as Marital Property

In Illinois, any property acquired during a marriage is usually categorized as marital property and is subject to fair distribution in the event of a divorce. This includes various retirement accounts such as 401(k)s, IRAs, and pensions. The portion of the retirement account accumulated during the marriage is also usually deemed marital property, making it eligible for division.

Determining the Value of Retirement Accounts

Valuing retirement accounts is vital in the first step of dividing the account. You can start this process by obtaining statements from the financial institution that holds the account or by hiring a financial expert.

Dividing Retirement Accounts

Once the value of the retirement accounts has been determined, the court will decide how to divide them. In Illinois, marital property is divided equitably, meaning it is divided fairly but not necessarily equally. When determining the allocation of retirement accounts, the court considers various factors. These include the duration of the marriage, the contributions made by each spouse during the marriage, and their respective financial situations.

In some cases, the court may award one spouse a larger share of the retirement accounts if they contributed more to the marriage or had a greater need for financial support. For example, if one spouse stayed home to raise children while the other spouse worked and contributed to a retirement account, the court may award a larger share of the retirement account to the spouse who stayed home.

Qualified Domestic Relations Order (QDRO)

To divide certain types of retirement accounts, such as 401(k)s and pensions, a Qualified Domestic Relations Order (QDRO) is required. A QDRO is a court order instructing the plan administrator to divide the retirement account according to the divorce settlement terms. The court must approve the QDRO and the plan administrator before implementing it.

It is important to note that not all retirement accounts require a QDRO. For example, IRAs can be divided without a QDRO. However, it is still important to follow the proper procedures when dividing an IRA to avoid tax penalties.

Contact a Kane County Divorce Lawyer

Dividing retirement accounts in a divorce can be complicated, and the mistakes made during this process can have long-lasting financial consequences. Working with an Aurora, IL family law attorney throughout the process is important. Call The Law Office of Matthew M. Williams, P.C. at 630-409-8184 today to get started.

Source: https://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=004000050K1-119