The shift from traditional pensions to retirement “savings” plans (401Ks, IRAs, 403Bs, etc.) demands a new diligence in retirement division. Unlike pensions, these accounts require detailed tracing to separate marital contributions from non-marital money—a task many divorce practitioners overlook, sticking to outdated pension strategies.
❌ The ‘Marital Share’ Trap
Agreements often mention “marital share” for retirement savings accounts, but leaving this term undefined leads to issues. Example: “Wife shall receive 50% of the marital share from the Husband’s Fidelity 401K.” This vague term suggests a non-marital share but is usually undefined at the agreement’s signing.
Why It’s a Problem?
Many still use pension-era methods, assuming that the retirement plan administrator will calculate the ‘marital share’. That is not the case. This leaves agreements open-ended, QDRO rejected, and clients frustrated that their non-marital property was not accurately identified.
✅ The Solution?
Replace the vague ‘marital share’ with clear terms:
- Path 1: Define non-marital amount BEFORE signing. Retain expert to trace/determine the non-marital share.
- Path 2: Treat the entire account as marital if the non-marital share can’t be proven. Replace ‘marital share’ with ‘total account balance’ to add specificity. Example, “Wife shall receive 50% of the total account balance from the Husband’s Fidelity 401K.”
Choose the Right Expert
A Certified Financial Planner (CFP) is well-suited for potential court testimony, possessing expertise in retirement and investment planning. This is particularly valuable for making assumptions on investment returns in cases where statements are absent.
Experts: Worth the Cost? What If Statements Are Missing?
Don’t risk more to save less. Experts can identify the most practical solution for unavailable statements. Otherwise, you risk wasting retirement funds and malpractice.
Need Help with a Case?
TOVA is a one-stop retirement expert resource for divorce attorneys. We help simplify the complicated. From checking retirement benefits, tracing/valuing retirement plans, FREE settlement language help, QDRO prep with pre-approval to expert witness testimony by Denisa Tova-Liebman, MBA, CFP, CDFA, CQS, recognized by courts.
Email at Denisa@TovaRetirement.com. or Submit New Case – Click Here
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