Distribution of pension plans in divorce

Question:Divorce lawyer Leslie Lorenzano

My pension does not vest until I have been working for 20 years, which is 8 years away. I have been told my soon-to-be-ex is entitled to half of my pension.

But what half is she entitled to? Half of the contribution amount that is in the account as of the file date or half of my pension when benefits are paid after 20 years?

Answer:

Pensions can be a significant source of contention in dissolution cases especially where the laws and valuations of the accounts are unclear.

The presumption is that your wife would receive half of the value of your retirement account as of the date of filing of your dissolution. Any value you accrue after the date of filing is not included in the marital estate.

That being said, splitting pensions can be tricky to understand in a dissolution proceeding due to whether the pension is vested or not at the time of dissolution.

In Indiana, where I practice, if your pension is not yet vested at all, it is not included in the marital estate.

Some employers have a vesting schedule where part of your pension would be vested before the pension is vested in its entirety. Check with your employer to determine if there is a schedule allowing your pension to be partially vested. Meaning if you were to retire tomorrow, would you get any portion of your pension?

If your pension is not vested at all until your 20th year (so if you would receive no pension if you retired tomorrow), then it holds no value in the marital estate, because it only has value if you complete another 8 years of work with the fire department after the dissolution, which is not guaranteed.

Cordell & Cordell has divorce attorneys located nationwide.

 

Leslie Lorenzano is a Staff Attorney in the Indianapolis, Indiana office of Cordell & Cordell where she practices domestic relations exclusively. Ms. Lorenzano is licensed in the state of Indiana and the U.S. District Court Sothern District of Indiana. Ms. Lorenzano received her Bachelor of Arts in Sociology from Purdue University, and her Juris Doctor from the University of Arizona – James E. Rogers College of Law.

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