Pension Rights After Divorce in New Jersey


Pension Rights After Divorce in New Jersey

When spouses divorce, the primary economic focus is on the marital home, the bank accounts of each spouse, their vehicles, and their personal possessions. The equitable division of marital property may also include a business, stocks and bonds, jewelry, and other assets.

And,  it’s also likely that you’ll have pension rights after divorce. A knowledgeable divorce attorney can make sure that your spouse’s pension is included as property and assets are divided.

Spouse Pension Rights After Divorce

In New Jersey, all marital property is divided equitably. Marital property does include different types of retirement benefits including pensions, 401ks, 403Bs, Roth IRAs, traditional IRAs, annuities, and other assets that are set aside for retirement. New Jersey divides marital property (including pensions and other retirement benefits) equitably. 

However, equitably doesn’t necessarily mean equal. The family court will apply many factors such as the economic circumstances of each spouse, the contribution of one spouse to the other spouse’s ability to earn a living, the length of the marriage, the need for one parent to keep the marital home, and other factors. The important thing for you to remember is that you do have rights to your  spouse’s pension after divorce.

Can I claim some of my ex-husband’s pension after divorce?

Your lawyer needs to file a claim for equitable distribution in order for you to claim your spouse’s retirement benefits. Your lawyer can also file a claim for alimony. In alimony cases, the amount of the pension (and other retirement benefits) may be used to determine how much alimony is due.

How is a pension split in divorce divorce?

The New Jersey law on pension rights after divorce and divorce pension splits is such that the portion of the pension or retirement benefit that was earned or accrued during the marriage – even though your husband or spouse can’t access the pension until they reach the age of retirement. Contributions to a pension before the marriage or after the divorce complaint is filed are not considered part of the equitable distribution settlement or the pension divorce settlement.

How does a divorce pension payout work?

Divorce pension payouts are complicated. An experienced New Jersey divorce lawyer will help you assert your rights to your ex-spouse’s pension. Generally, pensions are considered qualified investments. Investments are qualified if they meet the federal standards established by the Employee Retirement Income Security Act of 1974 (ERISA).

Qualified investments are distributed pursuant to a Qualified Domestic Relations Order (QDRO). This order directs the entity that controls and pays the pension (such as your husband’s employer) to distribute part of the pension to another person (such as a wife) after a divorce.

Since you have established your rights to receive the pension after divorce, , your lawyer and your spouse’s lawyer will negotiate what percentage of the pension you will receive. As a general rule, you will only be entitled to the pension payout when your spouse reaches retirement age. If an agreement can’t be reached, the family judge will decide the percentage of the pension payout. The QDRO must be signed and distributed to the holder of the pension so the funds can be paid to each spouse at the appropriate time.

The value of the pension (for purposes of determining how much your share in the pension is worth – at the time of the divorce) is usually based on a formula. The formula includes:

  • The contributions to the pension
  • The number of years your spouse worked for the company that holds the pension
  • The current value of the pension
  • Other factors

The QDRO should also consider when the pension vests for purposes of the payout. For example, your spouse may have the right to take the pension when he turns 55. If he waits until he’s 65, the share of the pension may be larger.

Pension Rights After Divorce: Alternatives to using a QDRO for a pension payout

Many times, a wife/husband doesn’t want to wait until the pension vests before she is paid her pension share. A common alternative is to use the following steps:

Determine the value of the wife’s equitable share in the pension.

Agree that the wife will receive another asset for the same value as the pension value. For example, a wife who wishes to keep a house or business may agree to waive her pension rights after divorce in return for the husband waving his share (up to the value of the pension) in the house or business.

The same logic for this discussion applies if the wife owns the pension. The agreement should be placed in writing and made part of the divorce judgment.

At DeTorres & DeGeorge Family Law, our divorce lawyers fight to help you obtain all the property you deserve when you divorce. We often are able to negotiate strong, just agreements that protect your financial interests and prioritize your economic needs. When necessary, we work with financial experts who understand how to properly value assets such as pensions and retirement benefits. To discuss your pension rights after divorce and all other divorce issues, call us at 908-691-2104 or fill out our contact form to schedule an appointment. We have offices in Clinton and Morristown.

Rosanne S. DeTorres
Ms. DeTorres is the managing partner and co-founder of DeTorres & DeGeorge Family Law. She is also only one of 150 attorneys in the State of NJ that is certified by the NJ Supreme Court as a Matrimonial Law Attorney. Ms. DeTorres graduated...
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