When you retire, you will no longer have a paycheck to help support yourself. Your only revenue will be a combination of your retirement savings and your Social Security retirement benefits. Careful planning is the only way to ensure that such limited financial support can afford you a comfortable standard of living.
Although you may make contributions toward your retirement plan every week, those savings could fall far short if you now need to divide them with your ex. Instead of having one large account to cover all of a single household’s expenses, you might need to cover the expenses of two households with that same balance.
If your retirement savings are in your name or are an employment benefit, do you have to share them when you get divorced in Maryland?
Retirement savings are often at risk in a divorce
Although you may have had your job well before you got married and you may have been the only one making contributions to the account, at least some of your retirement savings may be marital property. Under the Maryland equitable distribution approach to property division, the courts will look more carefully at when you earned the income rather than who earned it or whose name is on the account.
Your spouse can ask for a share of the balance established during the marriage or at least for the value of their share of the account.
You can share retirement benefits without losing anything
You may be able to use other assets to compensate your spouse for their share of the account, but that isn’t always feasible. If you need to divide a retirement account in your Maryland divorce, one of the attorneys can draft a Qualified Domestic Relations Order (QDRO). If properly executed, that QDRO will prevent you from taking a loss in the form of taxes and penalties because of an early withdrawal.
If your spouse has spent several years out of the workforce to support your career or raise your children, they can also potentially make a claim against your social security retirement benefits. You won’t have to divide them, as your ex’s claim will not diminish how much you receive in benefits.
Understanding what happens to retirement savings and other benefits can help you plan for a secure financial future after your Maryland divorce.
