If you have accumulated money in a workplace pension, you know how important it is to your retirement plans. However, if you are facing a divorce, you will likely lose some of your pension if it qualifies as marital property since you will have to split it with your spouse.
You might also have a 401(k) and already understand how to divide it with a QDRO. However, Kiplinger explains that splitting a pension may not be as simple.
Pensions can vary
There are not many types of 401(k)s, so it is not hard to figure out how to divide one up so you do not incur penalties for an early withdrawal. By contrast, pensions can take various forms depending on whether you have a government or a private pension, and also according to your specific employer.
Basically, employers tend to establish their own rules for splitting up a pension or even to allow for the division of a pension at all. Checking with your employer may reveal what you must do to split your pension. You may also require a QDRO depending on the kind of pension you have.
Know the value of your benefits
If you already receive your pension benefits, you should understand the value of the pension and can establish an equal division with your spouse. However, if your pension has yet to pay out, you may need an actuary to determine the future value of your pension benefits to establishing a proper division.
Be aware that you may have to pay state and federal taxes on your pension benefits. An actuary report might not take these taxes into account. Being aware of these complications could help you make informed decisions when planning for the future of your pension and other retirement assets.