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How do Illinois courts divide retirement accounts during a divorce?

On Behalf of | May 24, 2021 | Uncategorized

Retirement savings such as Roth IRAs or 401K accounts can be a subject of significant tension when married couples divide assets. It is somewhat understandable that there may be proprietary feelings about them because they are associated with people’s employment.

In divorce proceedings, these accounts may be among a married couple’s most valuable assets. Contrary to popular belief, a court will not always split the account right down the middle.

Only marital property is subject to distribution

Not all of a retirement account will be subject to equitable distribution in Illinois divorce proceedings. Typically, a court will divide only the portion of an account that a person acquires during the marriage.

It may be possible to arrange a “buy out”

It is common for one spouse to “buy out” the other’s interest in an account. This offers the spouse who is not the account holder the benefit of immediate access to retirement funds.

Patience may pay off

At the time of a hearing, a court will probably be able to make a determination about what funds from an account each party will have access to when the account holder retires. To get the greatest amount possible, it may be beneficial for the spouse who is not the account holder to wait until his or her former spouse retires to receive his or her share.

Understanding some of the basic principles of distributing retirement accounts can help people to set reasonable expectations and possibly reach a mutual agreement. If a divorcing couple cannot agree, a court will attempt to divide an account as fairly as possible.