When a worker decides to borrow against the contributions they have made to their retirement plan, they are reducing their assets and their value as a couple. In a divorce, these loans are viewed accordingly and will be considered a liability. Our Westlake Village family law attorney can answer your questions about how these loans could affect the division of your assets during a divorce.
Exclusions to Marital Property
Family court looks at when an item was obtained when they decide how to divide assets. For example, if a person receives an inheritance before they are married, the money could likely be exempt from marital property. The same guidelines apply to pension plans. When money is placed in an account before the wedding and possibly after a separation, it is usually labeled as a personal asset and not included as joint property. If you are not clear if an item is excluded, talk to our Westlake Village family law attorney.
Our Westlake Village Family Law Attorney Provides an Example
However, calculating these numbers can be complicated at best. Experts cannot agree on formulas and use various calculations, which lead to different results. One method simply adds up all deposits and interest in the account while another calculates the number of retirement work units credited to the employee. However, the most straightforward method uses the following formula and divides the months or years of marriage by the months or years of employment. That number is then divided by the pension amount, which yields the marital portion. In one example, the couple has been married for 120 months or 10 years, and the husband has been at his job for 180 months or 15 years. If his IRA is worth $75,000, the couple would split $50,000, so the wife would receive half of that or $25,000. Our Westlake Village family law lawyer can help you crunch the numbers for your situation.
If you have questions about the timing of contributions or loans and retirement accounts, talk to our Westlake Village family law attorney. Gary Mitchell can offer clarification on your specific issue; call him at 888-452-1846.