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What happens to your retirement fund when you divorce in WA?

There are a lot of variables to a divorce that can leave those considering ending their marriage confused and worried about the future. Custody of minor children is often a concern, as is how the courts will handle dividing your assets. You may find yourself worrying about the implications of a divorce on your financial future.

Retirement accounts or pensions are often some of the biggest assets a couple builds up over the course of their marriage. Home equity is another. You may find yourself worrying about how the courts will handle your retirement or pension account, especially if it isn't in your name.

Washington is a community property state

Every state has its own laws in place regarding the division of assets in a divorce. Washington law makes it a community property state. At its most basic, this means that all assets and income, as well as all debts, acquired by either spouse during the marriage is community property in the eyes of the courts. It doesn't matter who made more money or whose name is on the retirement account. What matters more is when you or your spouse deposited funds.

Generally speaking, that means that assets and debts end up split equally between divorcing spouses. In some cases, however, the courts may consider evidence that results in an unequal division of your assets or debts. The truth is that every divorce is as unique as the couple going through it. There is no direct, specific answer to how the courts will divide your possessions. However, there are basic guidelines that can help you figure out what is likely to happen in your divorce.

The courts may order the division of the account

If you and your spouse can't agree on terms for asset division, the court will set them for you. They will review a list of all of your assets and then attempt to divide them in a manner that is equitable and fair to all. That could mean dividing a retirement account between you and your spouse. It could also mean receiving other assets of a similar value in lieu of splitting the account.

Thankfully, this kind of split is quite common, and with a Qualified Domestic Relations Order (QDRO) the account division doesn't have to result in any tax penalties or fees. The courts issue a QDRO, and the plan administrator creates a new account in the name of the spouse not holding the original account. A percentage of the balance of the original account gets transferred into the new account.

Pensions can sometimes prove more difficult to divide. The courts may offset the value of the pension by awarding the spouse without a pension an equivalent value in other marital assets. Other times, they may order the actual pension to be divided.

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