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Your Rights to Retirement Assets

Rundberg Law, LLC May 10, 2022

For many individuals, retirement savings are one of their most important assets. In fact, couples who want to maximize their retirement benefits often coordinate their retirement planning efforts together with their spouse. However, in the event of marital dissolution, the couples will be required to distribute their marital property and retirement savings equitably and fairly. Aside from that, there may be legal and tax implications of dividing retirement benefits before reaching the retirement age.

Older couple sitting down and signing papersAt Rundberg Law, LLC, I'm dedicated to providing knowledgeable legal counsel and reliable advocacy to clients in complex divorce matters involving the division of retirement assets. As a knowledgeable family law attorney, I can enlighten you about your rights to retirement savings in your divorce, as well as the legal and tax implications of dividing retirement benefits and savings. My firm proudly serves clients across Overland Park, Johnson County, and surrounding counties throughout Kansas and Missouri.

Division of Property
in Kansas

Kansas is an "equitable distribution" state. Under state laws, marital property – all assets, property, debts, and liabilities accrued by the couples during their marriage – must be divided between the spouses "equitably and justly." Though, equitable doesn't necessarily mean "equal" but rather, fair. The Kansas court will consider the following factors to achieve equitable property distribution in a contested divorce:

  • The duration of the marriage

  • The age of each spouse

  • The separate property owned by each spouse

  • The time, source, and manner of acquisition of property

  • The present and potential earning capacity of each spouse

  • Each spouse's family ties and obligations

  • The dissipation of assets of either spouse

  • The allowance of spousal maintenance (alimony) or lack thereof

  • The tax consequences of the property distribution upon the respective economic circumstances of the parties

  • Any other factor considered necessary by the court to achieve a fair and reasonable property division

Division of Property in Missouri

Missouri is also an “equitable distribution” state. This means that marital property will be divided in an "equitable and fair" manner, but not necessarily equally. To achieve equitable property distribution, the Missouri court will consider the following factors:

  • The value of any non-marital property (separate property) belonging to each spouse

  • The economic circumstances of each spouse at the time of the property distribution

  • The contribution of each spouse to the acquisition of the marital property, including the contribution of a spouse as a homemaker

  • Custody arrangements for minor children

  • The behavior of the spouses – conduct or misconduct – during the marriage

  • Any other factor deemed necessary by the court to achieve an equitable property division

A knowledgeable attorney can enlighten you about how the division of property may affect your retirement savings and help you navigate crucial decisions.

How Retirement Assets Factor In

The distribution rules addressing the division of retirement assets and benefits in a divorce usually depend on the types of retirement plans. The various types of retirement accounts include:

  • Traditional retirement plans, such as an IRA, 401(k), and annuities

  • Defined-contribution plans

  • 403(b) plans

  • Saving accounts

  • Defined-benefit plans

  • Profit-sharing plans

  • Roth IRAs

  • Military benefits

  • Payroll deduction IRAs

  • Government pensions

Any amount earned or deposited in the retirement accounts by the couples during their marriage, including employer-sponsored retirement plans, will be considered marital property. This will not include amounts in the retirement accounts prior to the marriage.

If no prenuptial agreement exists stating otherwise, both spouses will be legally entitled to receive part of the retirement savings. A skilled divorce attorney can help petition a Qualified Domestic Relations Order (QDRO) to protect your share of the retirement benefits.

Qualified Domestic Relations Order (QDRO)

A Qualified Domestic Relations Order (QDRO) is a legal document stating that a spouse or ex-spouse is entitled to a part of the retirement assets and savings. It will provide detailed instructions about how the retirement benefits will be divided between the divorcing couple.

The court will evaluate and determine the actual amount available in the retirement accounts. Your lawyer can file a QDRO to do the following:

  • Instruct the retirement plan administrator to transfer your part of the retirement benefits to you.

  • Prevent your ex-spouse from taking out the funds in the retirement plan.

  • Prevent your spouse's employer from paying out the retirement benefits directly to your spouse.

  • Punish your ex-spouse for withdrawing or taking money from the retirement accounts.

A trusted attorney can help you draft the QDRO and help you understand the legal and tax ramifications of dividing retirement benefits in a divorce.

Tax Implications of Dividing Retirement Assets

In most states, including Kansas and Missouri, retirement transfers are usually non-taxable (tax-free). However, a 10% penalty fee may apply if retirement assets and savings are distributed before reaching the retirement age. One way to avoid the withdrawal fee or penalty is to divide the retirement benefits according to the provisions of the divorce order. A reliable divorce attorney can walk you through the process of dividing retirement benefits.

Skilled & Compassionate Guidance

At Rundberg Law, LLC, I have the knowledge and resources to assist and guide individuals and families in divorce-related matters, including the division of marital property and retirement assets. Using my extensive legal understanding of both Missouri and Kansas laws, I can walk you through the asset division process and fight compassionately to protect what is rightfully yours. 

Contact my firm – Rundberg Law, LLC – today to schedule a simple consultation with a knowledgeable property division attorney. I can offer you the skilled legal counsel and brilliant advocacy you need to navigate crucial decisions in your divorce matters. My firm proudly serves clients across Overland Park, Johnson County, and surrounding counties throughout Kansas and Missouri.