Retirement accounts question


#1

I am planning to separate from my husband in the near future. I currently have about $4,000 in a Roth IRA; I also have been teaching in a public school system here in NC for two years, so I have three more years until I’m vested in the state retirement system (eg, a future pension). They currently take out 6% of my paycheck each month, so I probably have at least $4,000 of my own money in the state system in addition to the Roth. Here are my questions: is my husband entitled to half of the Roth as it stands at the date of separation, or is he also entitled to half of the Roth’s future earnings? Can he get any of the money I currently have in the state retirement system, or worse, any of my future pension? Thank you.


#2

Sorry–I forgot to say that I’ve been married to my husband for five years.


#3

Your husband is only entitled to one half of the money you saved from the date of marriage to the date of separation. He is not entitled to any future contributions (after you separate) or the growth thereon. The state retirement is also divisible in the amount that was saved during the marriage whether the account is vested currently or not. He will receive his portion of the benefits when you retire if the accounts are split. Since the marriage is relatively short, my guess is that it would be more cost effective to offset any retirement money he is owed using other assets (giving him a larger amount of other property) as dividing retirement accounts involves a process that can cause legal bills to add up quickly. In some cases the cost to divide the accounts could exceed the amount a spouse is entitled to in some cases.


#4

Keep in mind…it works both ways. YOU’RE entitled to 1/2 HIS retirement/IRA. Many cases work like this: you keep yours, I’ll keep mine. It’s a hassle to figure up what’s owed after figuring up 1/2 of each others’.

Now if one person makes significantly more, then I can see that it would be worth the hassle.

In MY case, my ex liquidated his 401K before we separated (without my knowledge)…I don’t know where it went…so there was nothing to divide. I didn’t have a 401K. So at 34, I had to start from scratch. Fun Fun!!