Divorce and Pension Payout

Divorce and Pension Payout

Divorce and pension payout.

Many people come to us who need to know about their rights to a pension – either their own or their spouse’s – and they want to know how payout works. Here’s the scoop on divorce, pension payouts and the division of retirement accounts for people who split up.

Divorce and Pension Payout

In many cases, one spouse is entitled to part of the other spouse’s pension. The payout depends on the plan – different systems have different requirements.

Related: Retirement and divorce settlements

What Happens to My Pension in a Divorce?

Pensions, like other types of assets in a divorce, can be community property or separate property. They can also be a mix of the two. Here’s how it works:

  • If you contributed to your pension while you were married, the contributions you made during that time are typically considered community property.
  • If you contributed to your pension before you were married or after you divorced, the contributions you made during that time are typically considered separate property.

Many pensions are a combination of separate and community property, which means they can be difficult to figure out. Some people hire a pension expert to assist them with the process.

Like other types of assets, pensions are divided equitably between the parties – but only the parts of the pension that are community property. (See why some people hire pension experts?)

Related: What are my financial obligations to my spouse?

Can You Agree to Keep Your Own Pensions if You Both Have Them?

Divorce and Pension Payout - Can You Keep Your Own PensionYou don’t have to worry about divorce and pension payout if you each have your own pension and agree to keep them separate when you divorce. In many cases, judges don’t have a problem with couples who agree to arrangements like this. However, every case is different – and what works in one divorce doesn’t necessarily work in another. You’ll need to talk to your Stockton divorce attorney if you each have a pension that you’re interested in keeping for yourselves; he or she will be able to give you the guidance you need.

Related: Are assets always split 50-50 in a divorce in California?

How Long Does it Take to Get Money From a QDRO?

A qualified domestic relations order is a court order that gives one party a right to a portion of another party’s retirement benefits. Typically called QDROs for short, the person who earned the benefit is called the participant and the person who receives a share of the benefit is an alternate payee.

The court will issue the QDRO – from there, it can take between 60 and 90 days to begin receiving the benefit (and for the participant to see the difference in his or her benefits).

Every retirement plan is different, though. Getting money from a QDRO largely depends on how long it takes a plan administrator to process the documents.

How Divorce and Pension Payout Work in Military Cases

Divorce and Pension Payout - Stockton Family LawIt’s a common myth that in order for a military pension to be split between parties to a divorce, the couple must have been married at least 10 years. That is not true, but it most likely stems from the fact that after a couple is married 10 years or more, pension benefit payments can come directly from the Defense Finance and Accounting Service, or DFAS.

In a military pension case, the former spouse may be entitled to a portion of the service member’s retirement account regardless of how long they were married. The pension payout depends on the service member’s pay grade at the time of the divorce, though – not his or her pay grade at the time of retirement. For example, if the couple has been married for 12 years and the service member is at the pay grade of E-6 at the time of the divorce (and at the pay grade of E-9 when he or she retires), the pension award is based on the pay grade of E-6 rather than E-9.

This recent change in the law means that divorced spouses are only entitled to a portion of the service member’s pension based on when the court granted the divorce – not the service member’s full pension amount at the time he or she retires.

Do You Need to Talk to a Lawyer About a Divorce Pension Payout?

If you’re not sure how pensions should be divided in your divorce, or if you’re considering divorce and one or both of you have a pension plan, we can help you.

Call us right now at 209-546-6870 to schedule a consultation with an experienced divorce and pension attorney. We’ll answer your questions and start building a strategy that gets you the best possible outcome.