Retirement Benefits Can Be Marital Property in an Oklahoma Divorce
In Oklahoma, retirement benefits can be a significant aspect of property division in a divorce. Oklahoma follows equitable distribution laws. This means that marital property is divided fairly, but not necessarily equally, between the spouses. This means that your retirement benefits may be split equally, but the court will find the most fair division rather than an equal division.
Retirement benefits, including pensions, 401(k) plans, IRAs, Roth IRAS, and other types of retirement accounts, are generally considered marital property if they were acquired or contributed to during the marriage. The length of your marriage, the time you have contributed to the retirement account before and during marriage and your spouse’s needs and contributions to the marital community may all play a part in the court’s determination regarding division.
Marital Property vs. Separate Property
Marital property typically includes assets and income acquired or earned during the marriage, including retirement benefits accumulated during that time. Separate property generally includes assets owned or acquired before the marriage, inheritances, gifts, or personal injury awards received by one spouse.
The distinction between marital and separate property is important because marital property is subject to division in a divorce, while separate property remains with the individual who owns it.
Equitable Distribution Standard
Oklahoma law follows the principle of equitable distribution, which means that marital property is divided fairly based on various factors, such as the length of the marriage, each spouse’s financial contributions, earning capacity, age, health, and the needs of any children involved.
Equitable distribution does not necessarily mean a 50/50 split of assets but rather a division that the court considers fair and just under the circumstances of the case.
Present Value vs. Deferred Distribution
Oklahoma courts use two basic distribution methods in an Oklahoma divorce, present value, and deferred distribution. Courts often prefer present value. In present value, the employee spouse is awarded the pension and the non-employee spouse will be awarded other marital property or money in lieu of their portion of the pension proceeds. This method can be used when the present value is known and when there are sufficient amounts of other marital property to offset the value. This division is often made as a lump sum payment to the other spouse.
In deferred distribution the non-employee spouse shares in the benefits of the pension plan at the time that the employee spouse becomes entitled to them. The court can calculate the percentage of those benefits that would be shared by the non-employee spouse.
Qualified Domestic Relations Order (QDRO)
A Qualified Domestic Relations Order (QDRO) is a legal document that allows retirement benefits to be divided between spouses as part of a divorce settlement. A QDRO specifies the percentage or amount of benefits each spouse is entitled to receive. The QDRO acts as official instructions regarding the division and is part of the divorce court orders. Not all retirement plans require a QDRO for division, but many employer-sponsored plans do.
Tax Considerations
It’s important to consider tax implications when dividing retirement benefits in a divorce. Some retirement account distributions may be subject to income taxes or early withdrawal penalties if not handled correctly. Consultation with tax professionals or financial advisors can help navigate these issues.
Legal Representation and Documentation
These decisions have consequences that you may not foresee. Consult with a Muskogee family law attorney. Your attorney can help assess the value of retirement assets, negotiate a fair settlement, prepare QDROs or other necessary documents, and ensure that your rights and interests are protected throughout the divorce process.
Consultation with a Muskogee Family Law Attorney
Contact the Muskogee lawyers at the Wirth Law Office – Muskogee for to schedule an initial strategy session today at (918) 913-0725. If you prefer to contact us by email, use the form at the top of this page.
