As noted on the Michigan Legislature’s website, retirement benefits earned in marriage become part of a couple’s marital estate. If you or your soon-to-be ex-spouse contributed to a retirement plan, annuity or pension fund, it may divide with your divorce.
Under Michigan’s just and equitable distribution requirement, marital estates divide fairly during a divorce. Fairness, however, does not always result in an even 50-50 split between two spouses. With retirement plans, the court may only divide the portion earned between the date of your marriage and your divorce.
How may a retirement plan divide between two spouses?
As noted by SmartAsset.com, a portion of the funds in a 401(k) account may transfer to an ex-spouse during a divorce. The transfer, however, requires a judge’s approval and a Qualified Domestic Relations Order.
A judge may not approve a transfer unless both spouses agree on how much of the plan they need to divide to consider fair. Spouses may also decide to leave the funds alone. They may instead accept cash distributions in the future when the account’s owner retires at the age of 70 and six months. Spouses may then receive regular payments or a one-lump sum distribution.
When may I choose to not take a spouse’s retirement fund?
Divorcing spouses have rights to income earned during their marriage. They may, however, decide to use part of it as a trade. After reviewing the assets in your marital estate, you could determine which may help bring about a fair divorce settlement. If you prefer to take ownership of a shared property, for example, you could discuss exchanging your fair share of a retirement plan for it.
Assets acquired during a marriage require a fair division under Michigan’s laws. Couples may, however, negotiate a retirement account distribution or buyout to reach what they consider a fair settlement.
