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Divorce and Family Law

What Happens to Retirement Funds During a Divorce in Arizona?

If your pension or retirement account was earned partially before marriage and partially during the marriage, then it has separate and community property components.

In Arizona, property acquired during the marriage is generally presumed to be community property, while property owned prior to the marriage is, subject to certain exceptions, generally presumed to be the sole and separate property of that spouse.

In a divorce, the Court must allocate all separate property to the appropriate spouse, and equitably divide all of the community property between both spouses. If your retirement account was earned entirely during the marriage, then it is presumed to be community property and will be divided equitably, which basically means equally.

If your retirement account was earned partially before marriage and partially after you got married, then it has both a separate property component and a community property component. The division of these “mixed” accounts is much more difficult and often requires a financial expert, such as a financial analyst or CPA, to calculate the separate and community portions of the account.

To implement the division of certain retirement accounts, a Qualified Domestic Relations Order, or “QDRO,” may be required. Such accounts typically include ERISA qualified plans, such as 401(k), 403(b), 457, profit sharing and pension accounts.

On the other hand, non-qualified plans, such as IRAs, Roth IRAs and brokerage accounts can usually be divided using forms accepted by the financial institution maintaining the account (for example, Fidelity, Vanguard, etc.).

 
          

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