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How Does Divorce Affect My Retirement Account?

Retirement accounts are typically counted as a marital asset in Colorado making them divisible in a divorce. However, when working with a skilled property division attorney in Denver, the method used to divide retirement accounts will depend upon their type and source of funding.

There are measures you can take to protect your retirement account in anticipation of marriage and once you are married. If you are concerned about the ramifications of divorce on your retirement account or other assets, contact an experienced Denver divorce attorney.

Marital Property Division in Colorado

Marital property in Colorado is generally any property acquired by either spouse during the marriage. The courts attempt to divide marital property equitably in Colorado. Marital property is distinct from separate property. 

Separate property is property:

  • Owned by a spouse before marriage;
  • Gifted to or inherited by one spouse alone during the marriage; or
  • Designated as separate property by a valid prenuptial or postnuptial agreement.

Many retirement accounts are partially funded prior to the marriage and continue to be funded after marriage. This makes them part marital and part separate property.

Retirement Accounts Can be Mixed Property

Retirement accounts that have both marital and separate property components are subject to division in a divorce. However, only the timeframe of the marriage is examined when determining marital value.

For example:

  • A retirement account is worth $100,000 before marriage;
  • That account increases in value to $200,000 during the marriage; and then
  • Upon divorce, only the $100,000 in increased value is marital property subject to division.  It does not matter whether the increase in value during the marriage was due to additional contributions to the account or growth in the investment value of the account or some of both.   

How Retirement Accounts are Divided in a Divorce

If the retirement account is a defined contribution plan, like an IRA or 401k a Qualified Domestic Relations Order (QDRO) or similar transfer method can be used to transfer retirement funds from an account in the name of one spouse to an IRA in the name of the other spouse. This does not result in any taxes, penalties or early withdrawal fees. 

If the retirement asset is a defined benefit plan, like a pension, it can also be divided by a QDRO.  In this instance the QDRO would typically direct the pension plan to pay a specified portion of the pension benefit to each party once the participant was eligible to retire. 

Protect Your Retirement Account: Contact a Colorado Divorce Attorney Today

You can make provisions to protect your retirement account in the event of a divorce. Contact the skilled Denver family law attorneys at Hogan Omidi, PC, to discuss a prenuptial agreement or postnuptial agreement to maintain your retirement assets as separate property.

Defining your sole right to your retirement will eliminate any questions or battles over this property should your marriage end in divorce. In addition, Hogan Omidi, PC, can help you ensure other property you have worked for, such as your children’s inheritance, is beyond the reach of a divorce.

Contact us to schedule your consultation with Hogan Omidi, PC, today. We “wrote the book” on Colorado family law and procedure.