Getting divorced can be an incredibly complicated and emotional process. One of the most complex financial matters to sort out is how retirement benefits like 401(k)s, pensions, and social security will be divided. This is especially tricky if the retirement funds were accumulated before the marriage.
So, how long do you need to be married in order to get half of your spouse’s retirement savings in Minnesota? Can you claim retirement benefits they earned before your marriage?
Understanding these rules can help you determine what share of retirement benefits you may be entitled to if you or your spouse file for divorce. Our family law attorneys share some insight.
Retirement Benefits as Marital or Non-Marital Property in Minnesota
Minnesota is an “equitable distribution” state when it comes to dividing assets like homes, bank accounts, businesses, and retirement savings in a divorce. This means that marital property is divided in an equitable (fair) manner between spouses. This is not necessarily an equal 50/50 split.
Retirement funds earned during the marriage are classified as marital property. This means they are subject to equitable division upon divorce.
However, retirement benefits earned by one spouse prior to the marriage are generally considered non-marital property belonging solely to that spouse. Upon divorce, the other spouse is typically not entitled to a share of retirement accumulated before they were married. Things get even more complicated if contributions were made to retirement accounts during the marriage. In that case, a portion of the retirement funds are considered joint marital property.
For example, let’s say one spouse has been contributing to a 401(k) for 20 years. They get married and continue contributing to the 401(k) for another 5 years before getting divorced.
The spouse would be entitled to an equitable share of the funds contributed to the 401(k) during those 5 years of marriage. But they would have no claim over the funds contributed in the 15 years prior to the marriage.
Next, let’s look specifically at how different types of retirement plans and benefits are divided in Minnesota divorces.
Dividing Retirement Accounts Upon Divorce in Minnesota
Retirement plans like 401(k)s, 403(b)s, and IRAs are classified as either marital or non-marital property. The share that accrued during the marriage can be divided between spouses in a divorce.
401(k) Division
To split a 401(k), a Qualified Domestic Relations Order (QDRO) must be submitted to the plan administrator. This is a court order signed by the judge as part of the divorce decree. It instructs the 401(k) provider to distribute funds from the account to the former spouse.
Usually, the spouse getting a share of the 401(k) has the option to transfer those funds to their own 401(k) or IRA. They can also cash out their share, although that usually results in paying penalties and taxes.
So if $100,000 were contributed to a 401(k) account during a 10-year marriage, the other spouse would be entitled to an equitable share of that $100,000. For example, they may get 50% or $50,000 transferred to their own retirement account.
Pension Division
Pensions are also classified as marital or non-marital property in Minnesota. The marital portion of a pension can be divided by submitting a separate QDRO to the pension plan administrator.
The QDRO will specify the amount or percentage of each pension payment the alternate payee (former spouse) is entitled to upon the plan member’s retirement. They will then receive this monthly share of the pension benefit for as long as the plan member is receiving pension payments.
IRA Division
An IRA can be divided by transferring the agreed-upon amount to the former spouse’s own IRA account. This transfer of IRA funds typically happens upon divorce if both spouses agree to the amount each will receive. If not, a QDRO may be needed to split the IRA. Again, the spouse would only be entitled to a share of IRA contributions made during the marriage, not before.
Getting Social Security Retirement Benefits from an Ex-Spouse
Social security benefits are not considered marital property under Minnesota law. So they are not divided as an asset in divorce settlements.
However, there are circumstances where you can collect retirement or spousal benefits from an ex-spouse’s work record after divorce.
Here are some scenarios:
- If the marriage lasted at least 10 years, the lower-earning spouse can claim spousal benefits on the higher-earner’s record upon reaching age 62. This does not reduce the retirement benefit of the main worker.
- If divorced after at least 10 years of marriage, the ex-spouse can collect the same benefits as a current spouse when the main worker files for benefits. They can get up to 50% of the worker’s benefit.
- At their full retirement age, the lower-earning ex-spouse can file a “restricted application” for spousal benefits only. Then, they later switch to their own increased retirement benefit.
- A divorced spouse may be eligible for survivor benefits on the ex’s record if the marriage lasted at least 10 years.
While social security benefits don’t automatically get divided in divorce, taking advantage of these options can provide much-needed retirement income.
Work With a Minnesota Divorce Attorney for Post-Marital Retirement Division
As you can see, dividing retirement benefits in Minnesota can get complicated fast. The rules vary depending on factors like how long you’ve been married, when funds were contributed, and what types of retirement plans are involved.
If you or your spouse are considering divorce, connecting with a Minnesota family law attorney is crucial. They can analyze your specific situation and help protect your rights to an equitable share of marital property – including retirement accounts.
An attorney can also assist with important legal documentation like QDROs and submit them properly to divide qualified plans. They will ensure you receive the maximum retirement funds you are entitled to under Minnesota law.
Contact us today to meet with our experienced Minnesota divorce and family law attorneys. We can help you understand your rights and navigate this challenging process. The skilled family law attorneys at Martine Law fight to protect your financial future.
