What Happens to Retirement Funds in an Illinois Divorce?

 Posted on August 07,2024 in Asset Division

When a couple decides to end their marriage, there are many things they need to figure out how to split. Whether they own a home, have children, or founded a business together, it can be complicated going from being a couple to becoming two single individuals. One of the things that people often ask about is what happens with their retirement funds if they get a divorce. This article will explain a bit about how these funds would likely be divided. If you have further questions, speak with a knowledgeable Wheaton, IL divorce lawyer to find out more.

How Are the Funds Divided?

In Illinois, retirement funds are considered marital property if they were accumulated during the marriage. This means that both spouses might have a valid claim to them. The division of retirement accounts is usually part of the overall property division process in a divorce. To understand how a couple’s retirement funds might be divided, there are several things to consider:

• Types of retirement accounts: There are different types of retirement accounts, such as 401(k)s, pensions, and Individual Retirement Accounts (IRAs). Each type might be divided differently, so it is important to understand how your specific account works.
• Equitable distribution: Illinois follows the principle of "equitable distribution" when dividing marital property. This means that instead of being divided equally, assets are to be divided in a way that can be considered fair based on factors like each spouse’s financial situation, how long the couple was married, and what each spouse contributed to the marriage. 
• Qualified Domestic Relations Order: Some retirement accounts, like 401(k)s and pensions, need a special court order called a Qualified Domestic Relations Order (QDRO) to divide the account. A QDRO outlines how the retirement funds should be split between spouses. It ensures that the division is done correctly and without penalties.
• Tax implications: It is important to understand the tax implications of dividing retirement funds. Some transfers might be taxed, so it is a good idea to consult with a financial advisor or tax professional.

Schedule a Free Consultation with a DuPage County, IL Divorce Lawyer

Getting divorced can be a complicated process to go through, but a qualified Wheaton, IL divorce attorney can help make it smoother. At Goostree Law Group, we are passionate about helping our clients navigate the complex process of dividing retirement funds during a divorce. Call us at 630-364-4046 so we can discuss this further.