Pensions, 401(k)s and other retirement plans are typically considered marital property in Michigan. The portion of the retirement plan earned during a couple’s marriage will get divided. This is without regard to whose salary went into the retirement account or whose name is on the plan.
While in many cases spouses split their marital property 50-50, Michigan law does allow for adjustments based on equitability. Sometimes, it may be fairer to give one spouse more property.
There are a couple of exceptions to keep in mind. For one, federal benefit programs, including military retirement plan, have some additional rules and considerations.
Also, there are situations in which you may have saved a considerable balance in your account prior to marrying. Provided you can document this, you may be able to keep that portion of their account without dividing it.
How do I go about dividing up my retirement plan?
You have at least a couple of options.
You could request just to keep your retirement plan. However, you will likely have to trade off with your spouse by surrendering other property or agreeing to take on additional marital debt.
In the case of a pension, you will likely need to get an expert opinion on how much the pension is worth in today’s dollars before pursuing this option.
You could also divide up the retirement plan itself. There are options for doing so without incurring negative tax consequences.
In some cases, you or your spouse will need to agree to properly prepare a qualified domestic relations order, or QDRO, and, after getting the court’s approval, submit it to the retirement plan’s administrator.
West Michigan residents should make sure they understand how best legally to handle their retirement plans in a divorce. This is important question since people from different walks life have money, often a lot of their net worth, tied up in their retirement plans.