Retirement plans may be a significant portion of the marital assets. Under Arizona law, retirement benefits earned during the marriage are community property. In order to divide many types of retirement accounts, federal law requires a separate order called a “Qualified Domestic Relations Order” before the accounts / pension can be divided. Often in divorce, retirement assets are a considerable part of the marital property.
For legal purposes, there are 2 types of retirement accounts: qualified and non qualified accounts. Qualifed accounts are governed by federal law (“ERISA”) and require a QDRO to divide them.
Non-qualified plans, such as IRAs, do not require a QDRO, but specific language should be included in the divorce decree to ensure proper division without penalty.
Types of retirement accounts that are subject to division include:
- Defined contribution plans
- 401(k) assets
- 403(b) assets
- IRA assets
- Roth IRA assets
- 457(b) assets
- 409A nonqualified deferred compensation plans
- Simplified Employee Pension Plan (SEP)
- Employee Stock Ownership Plan (ESOP)
- Defined benefit plans — Private and governmental pension plans
Have questions about Retirement Division? Contact us and schedule a free 30-minute consultation.