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Are retirement accounts subject to division during divorce?

On Behalf of | Jan 15, 2021 | Divorce

As in other states, Ohio law recognizes a distinction between separate and marital property. In general, assets acquired during the marriage become marital property and are subject to division upon divorce. 

In Ohio, retirement and investment accounts are also subject to division, including employer-based plans, federal and state plans and private plans, such as 401(k)s. This is true regardless of which spouse’s name is on the account and how much each spouse contributed. 

How the law divides investment accounts

Contributions made to an investment plan prior to marriage and money earned on those contributions remain separate property. However, contributions that either spouse made during the marriage become marital property subject to equitable distribution under the law. 

Equitable distribution may not mean equal division. Rather, the court tries to distribute assets in a way that is economically fair for both parties. While a 50/50 split of benefits is possible, other issues of property and debt division may lead a judge to award a greater portion or even the entirety of a plan’s benefits to one spouse. 

Valuing investment accounts

The law values individual plans like IRAs and 401(k)s according to statements of invested funds. It values plans with a monthly benefit upon retirement by determining the current dollar value of the future benefit. 

The financial logistics of divorce can quickly become complex if a couple’s estate includes one or more investment plans. Careful analysis may be necessary to accurately appraise the present dollar value of investments and determine what portion constitutes divisible marital property. 

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