One of the most challenging aspects of divorce proceedings is determining how a couple’s assets, finances, and debts should be divided upon dissolution of the marriage. Virginia is an equitable distribution state, which requires courts to divide and distribute marital assets and property fairly between both parties. In Virginia, the court applies and is required to consider all factors under Virginia Code Section 20-107.3
One type of marital or hybrid property that is subject to property division by the court is retirement accounts. Below, we’ll take a closer look at how retirement accounts are divided in a Virginia divorce.
If you are beginning the divorce process, it’s crucial to have experienced legal representation. Contact Roop Xanttopoulos Babounakis PLLC today to discuss your case and learn how our dedicated Virginia divorce attorneys can help.
Are Retirement Accounts Considered Marital Property?
In most cases, retirement accounts are considered marital property. In Virginia, there are three main types of property in a marriage:
- Marital (or joint) property – property jointly held by both spouses
- Separate property – property owned exclusively by one spouse
- Hybrid property-property which contains a mix of marital and separate property
Only marital and hybrid property is subject to property division by a court during divorce proceedings. Retirement accounts in which money or compensation was contributed during the marriage are generally considered marital or hybrid property even if only one spouse is named on the account or if the account increased in value before the marriage or after separation.
Most retirement accounts are categorized as defined contribution plans or defined benefit plans.
Defined Contribution Plans
Defined contribution plans include 401(k) plans, Thrift Savings Plans (TSPs), and IRAs. Employees and employers set aside a specified portion of every paycheck, which goes into these accounts and accumulates until the employee retires.
When dividing defined contribution plans, a Virginia divorce court will consider various factors, such as the amount of time you and your spouse were married and the contributions made into these accounts. Defined contribution plans like IRAs are only regarded as marital property for the period you were married and for which contributions were made. For instance, if you have had a retirement account for 25 years and were married for 20, five years of contributions would be considered separate property, while 20 would be considered marital property and subject to division.
In Virginia, your spouse cannot get more than 50% of your defined contribution plan. And fortunately, the court must still abide by Virginia’s “equitable distribution” rule. Your spouse is not necessarily entitled to 50% of your retirement account. That is simply the maximum amount they can receive. When dividing defined contribution plans, the court will consider your standard of living and each party’s current retirement savings, the other property divisions, marital fault, and monetary/non-monetary contributions.
Defined Benefit Plans
Also referred to as pensions, defined benefit plans are generally considered marital property in a divorce provided that they were contributed to by way of employment efforts or income contributions. As such, they are subject to property division. Typically, a defined benefit plan can be divided a couple of different ways.
One option is to divide the benefit plan during divorce proceedings based on its current value. The other option is to wait to determine the pension’s value at the time of retirement in the future. Under this option, the other spouse would defer receiving their portion until the pension-holding spouse retires. Another option is for the spouse to receive the marital share of the defined benefit plan benefits, if, as and when received.
Contact Us Today
Are you filing for divorce in Vienna, Virginia? If so, the seasoned and compassionate divorce attorneys at Roop Xanttopoulos Babounakis PLLC are here for all of your legal needs.
We understand that divorce proceedings can be emotional, and discussions about property division can quickly become contentious. You need an attorney who will defend your property rights, advocate for your interests in court, and help you navigate through the legal process.
Our attorneys have the skills to expedite the divorce process, saving you valuable time and money. We will work tirelessly to help you resolve any disputes that arise in a way that benefits you. Contact us today to speak with one of our Virginia divorce lawyers about your case.
- What Is a Collaborative Divorce? What Are the Advantages? - May 1, 2023
- How Is My Husband’s Business or My Wife’s Business Valued as Part of the Divorce? - April 1, 2023
- Do I Still Owe Child Support if I’ve Lost My Job? - March 1, 2023