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How do you split retirement savings in a North Carolina divorce?

It takes decades of savings to set someone up for retirement, but unfortunately, retirement doesn’t always go the way people plan. When your family changes, your expectations for retirement may need to change as well.

You have probably made retirement contributions based on living with your spouse and sharing cost of living expenses. Now that you find yourself facing a potential divorce, you will likely worry about what that means for your retirement assets.

If you and your ex don’t agree about how to split up your property, then a North Carolina family law judge will make decisions about your property for you. What would that process involve?

A judge can divide marital property

When a judge must make the final decision regarding the division of your property, they will apply the equitable or fair distribution standard established in North Carolina’s family code. Essentially, the judge will look at your family’s situation and try to find a fair solution for splitting your property.

Typically anything that you acquired during the marriage or that you share ownership of and control over with your spouse will be marital property. Assets that you held before marriage or an inheritance could potentially be separate property that you don’t have to divide, but most everything else will get split.

Your retirement account will likely include contributions made during your marriage. Those contributions may be marital property, making the value accrued in your retirement account during marriage subject to division.

You split the account with a special document

The judge will determine the appropriate division of the property, but it will be one of the lawyers involved in the divorce that will draft the Qualified Domestic Relations Order (QDRO) that splits a retirement account or pension.

This QDRO, after approval by the courts and submission to the individual responsible for managing the retirement account, allows you to split those retirement funds without taking an additional loss caused by penalties due to early withdrawal.

If you have retirement accounts, pension or other assets that could mean a complex property division process in your divorce, the first step in ensuring a fair outcome will involve gathering information about the property you and your spouse hold and its overall value. The balances of accounts and dates when you made contributions will influence how the courts split retirement savings.