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How are retirement accounts handled in a New Jersey divorce?

On Behalf of | Jul 5, 2023 | Divorce

Property division can be a contentious part of the divorce process. Retirement accounts are sometimes complex and require proper management.

Since New Jersey is an equitable distribution state, your retirement accounts could fall under the umbrella of marital property.

Equitable distribution for pension plans

New Jersey pension plans are marital property, making them subject to equitable distribution. This means both you and your spouse share ownership of your pension plans, even when only one spouse earned it.

Sharing ownership does not mean that you automatically split the value of your plan equally. Instead, the court will decide how to divide it based on certain facts about your marriage. For example, how long did your marriage last? Do you have many assets? What are the separate earning capacities of each spouse?

401(k)s as marital property

401(k) accounts are also typically marital property. However, the court only divides the portion that grew during the marriage. For example, if you entered the marriage with a 401(k) containing $75,000 and had $150,000 in it when the marriage ended, your spouse only has a vested interest in half of the account.

However, if you opened the account during the marriage, your spouse may have an equal interest in it.

Mutual arrangements

Sometimes spouses may come to agreements outside the system and decide what to do with assets and debts. Some agree to keep their individual accounts or trade shares of a spouse’s account for another asset.

Finding mutual ground and agreeing on the distribution of retirement accounts will speed up the process.


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