Maryland Divorce: How Should You Divide Pensions and Employment Benefits?

Whether you’re staring down retirement or just getting started with your career, your pension and other benefits will play a huge role in your divorce. Dividing a pension can be complicated, but it’s possible to do so in a way that benefits both spouses.

Equitable Distribution in Maryland

Before you proceed with retirement benefit division, it’s important to understand that Maryland is an equitable distribution state. Local courts will distribute property (including pensions and other retirement assets) equitably, but not necessarily equally. Courts may take a variety of factors into account when determining which spouse gets a particular portion of a pension or 401(k).

Dividing Benefits Via Mediation

If you and your ex end your marriage via mediation, you may enjoy greater flexibility in dividing pensions and other assets. For example, if you decide that regular pension transfers are too inconvenient or not financially beneficial, one spouse may keep the entire pension while another receives a greater share of other assets. If these issues are not resolved through mediation, pensions or other benefits may be divided in court.

Qualified Domestic Relations Order

One of the most common solutions to divorce-based division of retirement assets, a qualified domestic relations order (QDRO) grants an ‘alternate payee’ the right to receive a portion (or in select cases, all) of the other spouse’s pension plan. QDROs can:

  • Allow for temporary or permanent support payments for the alternate payee
  • Divide already accumulated retirement assets

Pension Plan Division Benefits

If you divorce a spouse with a pension plan, you may enjoy rights not granted to divorcing spouses with 401(k) or other retirement plans. For example: if your ex passes away following your divorce, you may continue to receive survivor benefits under his or her pension plan. However, survivor benefits sometimes cost extra. Some divorce arrangements include provisions for the earning spouse to opt for survivor benefits and accept the ensuing pension reduction.

Your spouse’s pension may be the most valuable asset in your divorce. Proceed with caution; a seemingly small oversight could lead to tens, even hundreds of thousands in losses after your divorce is finalized.

Struggling with property division and other financial arrangements for your Maryland divorce? The Rockville family lawyers at DiPietro Family Law can help. Contact us at your earliest convenience to learn more about your options.

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