How Are Retirement Accounts Divided During a Divorce?

Colorado's Property Division Laws

Colorado is an equitable division state. This means that all marital property must be divided equitably between the spouses during a divorce. Unlike a community property state where spouses each have a 50% interest in the shared marital property, equitable distribution does not require a strict 50/50 split of marital assets. Instead, the goal of property division is to divide the couple's property (and their debts) in a way that is fair. Doing so will look different for every couple as every household is unique.

When determining what is equitable during property division, the court considers many factors, including:

  • How long the couple was married
  • How each party contributed to the marriage
  • The income of each party
  • The potential earning capacity of each party
  • Any special needs of either spouse

When making property division determinations, the courts will also consider whether the couple shares children, if one parent is primarily responsible for them (or who has custody), and whether one spouse forwent a career to stay home and take care of the household and children.

Are Retirement Accounts Marital or Separate Property?

The general rule of thumb regarding marital and separate property is that property (or debts) acquired during the marriage is usually considered shared, marital property, while that obtained before the marriage is separate. As you can see, retirement accounts can be somewhat difficult to categorize. Many people establish their retirement accounts through their jobs, and many of these accounts predate their marriages and sometimes even meeting their spouses.

However, even when a retirement account predates a marriage, parts of it may be considered marital property and therefore subject to property division. If you or your spouse made deposits into your retirement account during the marriage (with limited exceptions), these deposits and any interest earned as a result of them would generally be categorized as marital property.

How Are Retirement Accounts Divided

Retirement accounts will be divided based on the type of accounts and the associated rules. In some situations, the portion allocated to the other spouse will need to be transferred to them, often through placement in a similar retirement account (such as an IRA). In other cases, the courts will identify the value of the retirement account (such as with benefit accounts), and the portion of that value owed to the other spouse will be transferred to them at the time of the account owner's retirement.

Pensions and retirement accounts can be incredibly complicated. If you are going through a divorce and have retirement accounts to deal with, it is highly recommended that you work with a skilled attorney. Your lawyer is an invaluable resource and can help you throughout the divorce process, helping you reach an equitable property division settlement.

What About Investment Accounts?

Investment accounts are treated very much the same as retirement accounts. If any marital funds are used to fund investment accounts, they will be identified as part of your shared marital assets and, as such, will also be subject to property division.

Do you have questions about retirement accounts or investment accounts and divorce? Call the Law Office of Greg Quimby, P.C. for help. Our team of legal professionals can draw upon their extensive experience to help you.

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