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Divorcing? Here’s how your retirement account will be divided

by | Apr 28, 2021 | Divorce |

A divorce can come at any moment in your life. If you’re towards the end of your working years when you find yourself in the middle of divorce proceedings, you probably have many more high-value assets to divide than a younger couple would. Among your most valuable assets is most likely a retirement account that you have been building up over the course of your career. What will happen those funds once the judge hands down the final divorce decree?

Marital vs. non-marital property

The first thing to understand about Minnesota divorces is how property division works. If the court is called upon to divide your marital assets, they will establish an equitable distribution. This doesn’t necessarily mean that the two portions will be equal – only that they will be fair considering all the factors in your particular situation and that of your spouse.

The court begins by dividing your assets into marital and non-marital property. This is important, because the court can divide marital property between you and your spouse, while your non-marital property will stay with you.

Generally speaking, marital property is any asset that you obtained while you were married, while non-marital property is anything you owned before getting married, or that was given exclusively to you (such as an inheritance or gift).

There are some exceptions to this rule. Some non-marital property can become marital property if the whole family uses them. This most often comes up with homes that one party owned prior to the marriage, and that the other spouse moved into after marriage.

Retirement accounts

How courts classify retirement accounts depends on the portion of the total balance that you added to the account before getting married. Whatever you contributed to your retirement account before your wedding day – as well as the interest that grew from that amount – is non-marital property, and you will be able to keep it. Anything you paid into the account after marriage is marital property, and thus the court can give a portion of it to your spouse.

It can be quite complex to calculate the various amounts that come from interest on your initial pre-marriage payments and post-marriage payments into your retirement account. But knowing the general formula that the courts use to decide how much to divide can help you to get an idea of what your financial situation might look like after your divorce.


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