Yes, retirement accounts are considered marital property in Illinois and may be divided during a divorce.
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Understanding the Division of Retirement Accounts
In Illinois, retirement accounts such as pensions, 401(k)s, and IRAs are often considered part of the marital estate if they were accrued during the marriage. Even if only one spouse contributed to the account, the other spouse may still have a claim to a portion of it.
Legal Context for Dividing Retirement Accounts
Under the Illinois Marriage and Dissolution of Marriage Act (750 ILCS 5/503), retirement accounts are subject to equitable distribution, meaning they are divided fairly but not necessarily equally.
Key Points to Consider:
- Only the portion of the retirement account earned during the marriage is subject to division.
- Pre-marital contributions and their growth are typically considered non-marital property.
- A Qualified Domestic Relations Order (QDRO) is often required to divide certain types of retirement accounts, such as 401(k)s or pensions, without tax penalties.
Example Scenario:
If a 401(k) account has $200,000 and $120,000 of that was contributed during the marriage, only the $120,000 is subject to division.
Steps to Divide Retirement Accounts
- Identify and Value Retirement Accounts
Determine the type and value of each retirement account, distinguishing between marital and non-marital portions. - Obtain a Qualified Domestic Relations Order (QDRO)
For accounts like 401(k)s or pensions, a QDRO is needed to divide the funds legally and avoid penalties. - Divide the Accounts
The division is based on equitable distribution principles, considering factors such as the length of the marriage and each spouse’s financial needs. - Account for Tax Implications
Ensure the division method minimizes tax liabilities for both parties.
How Attorneys Can Help
An attorney can:
- Help identify and value retirement accounts.
- Ensure proper preparation and filing of QDROs.
- Advocate for a fair division of retirement assets.
- Address tax and penalty concerns associated with dividing accounts.
Need Help Dividing Retirement Accounts?
Call (630) 366-1760 to speak with an experienced family law attorney. We’ll help you navigate the division of retirement assets and protect your financial interests.
Disclaimer: This page provides general information and is not intended as legal advice. For personalized assistance, consult a licensed attorney.
