Since you first got married, you and your spouse may have been saving for your retirement. You may have planned to travel in an RV all over the country or to buy a quiet retirement home in your favorite neighborhood.
You will likely have a combination of retirement savings accounts, Roth IRAs and pension benefits to help fund your retirement. Once you start thinking about divorce, it is perfectly natural to worry that the end of your marriage will have negative consequences for your retirement plan.
What will happen to your various retirement account when you divorce in Illinois?
You will likely have to share those assets
Even if your pension is in an account solely in your name or your spouse is the only one with access to your 401(K), the additions made to those accounts during your marriage belong to both of you. Under Illinois state law, the income and property acquired by both spouses during the marriage is marital property.
Both spouses have an interest in that property in the event of a divorce. The courts will determine how to divide the property based on a careful analysis of your individual and marital household circumstances. Everything from the length of your marriage to your health could affect how the courts specifically split your property.
For most couples, the balance in a retirement account and the value of a pension accumulated during the marriage will potentially be subject to revision. The court can order the direct division of specific accounts in some cases. They can also use the estimated financial value of those retirement assets to balance out other decisions regarding your biggest belongings and debts.
Will retirement transfers trigger penalties?
When you already know you will lose some taxes, early withdrawal penalties can seem like a big hit. The good news is that at least those losses are preventable, provided that you draft the right documents, like a qualified domestic relations order.
Given the uncertainty involved, you may want to explore direct negotiations to resolve property division matters in your divorce. That way, you have more control over the outcome and can preserve the assets that are most important to your personal retirement plans.
Learning about the rules that apply to property division in your divorce will help you feel confident when you file.