What to Know About Dividing Retirement Assets in Illinois Divorce

 Posted on May 22, 2023 in Divorce

Dividing retirement assets in a modern divorce can be a source of enormous contention during proceedings, which makes sense considering that retirement assets are often one of the most high-value assets someone can have. In Illinois, retirement assets are considered marital property and are subject to division during divorce proceedings. Understanding the legal requirements and options available for dividing retirement assets in Illinois is crucial to ensure a fair and equitable distribution. Discuss with your divorce attorney during this time as you look to protect your rights and understand your legal options.

Everything You Need to Know About Dividing Retirement Accounts in an Illinois Divorce

One of the most common ways to divide retirement assets in a divorce is through a Qualified Domestic Relations Order (QDRO). A QDRO is a legal order which instructs a retirement plan administrator to transfer a portion of the plan’s benefits to the non-employee spouse. The non-employee spouse then becomes the owner of those benefits and can choose to receive them at retirement age or roll them over into their own IRA account.

It is important to note that not all retirement plans are subject to QDRO. For example, individual retirement accounts (IRAs) do not require a QDRO for division. However, a QDRO may be necessary for other types of retirement plans, such as 401(k)s, pensions, and defined benefit plans. 

Another option for dividing retirement assets in Illinois is a Qualified Illinois Domestic Relations Order (QILDRO). A QILDRO is similar to a QDRO but is specific to Illinois state law. It allows for the division of retirement benefits in a way that complies with Illinois law and can be used for plans that may not accept QDROs. 

When considering the division of retirement assets, it is important to keep in mind that the contributions made to the plan are typically regarded as marital property. However, any contributions made before or after the marriage are considered separate property and are likely not subject to division. It is also important to consider the tax implications of dividing retirement assets. Depending on the type of plan and distribution method, taxes may be owed on the benefits transfer. 

Contact a Joliet, IL Divorce Attorney

While the process can seem daunting, hiring a highly competent divorce attorney can make the division of retirement benefits easier. For additional information, feel free to contact the skilled Joliet, IL divorce lawyers with Law Offices of Tedone and Morton, P.C.. Call 815-666-1285 for a free consultation. 

Source:

https://ilsrs.illinois.gov/sers/resources/qildro-information.html