How are Retirement Accounts Divided in Divorce

Like all other property (with a few limited exceptions) that is acquired during a marriage, retirement accounts are treated as community property and need to be divided. Regardless of the fact that the account may be solely in one party’s name, to the extent monies were contributed to the account either by the person or an employer, they are community.

If part of the monies in the account were put in prior to the marriage, those monies will be considered sole and separate of that party. An account history will need to be obtained to show the balance of the account as of the date of marriage, versus the balance as of the date of service of the divorce documents.

Subtracting the balance of the account as of the date of marriage from the account as of the date of service will give you the amount that is community property and needs to be divided between the parties.


The above equation is true for accounts that have an actual cash value such as 401K and IRA accounts. However, the math gets more complicated for pension and military and state retirement plans where there is no present day cash value and will pay a fixed monthly amount that will only be known when the party retires. In this scenario, an Order will be entered that directs the plan provider to divide the account in to two separate accounts so that when the party retires, the provider will begin sending the appropriate amount of monies to each party. If all of the pension was earned during the marriage and the party retires prior to the divorce, it is very easy to calculate the amount each party should receive (50/50). This is typically not the scenario though, and typically the party who is earning the retirement is still working building the account and/or part of the pension was earned prior to the marriage. In this case the math involves the years of marriage versus the years of contribution to the plan. As an example, one party has a pension plan that he/she has been contributing for 10 years prior to the marriage. The parties then get married and are married for 10 years during which the party continues earning his/her pension. The parties are divorced and the contributing party continues to work and contribute to the plan for 10 more years before he/she retires. In this scenario 1/3 of the pension is community property. Therefore the non-contributing party is entitled to 1/6 of the pension payment at the time of retirement (one-half of one-third).

These are complex issues and require a separate court order and approval from the plan administrator as to the wording and format of the order. You should consult with an attorney to discuss the type of retirement accounts that need to be divided and how that will be accomplished.

Contact the experienced and knowledgeable attorneys at Trullinger & Wenk to schedule a consultation. 623-201-8773Click here for more information about Divorce in AZ.

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