Divorce Impact on Pension & Retirement Benefits in Missouri

Real property and personal property acquired after the marriage may be considered marital property and may be divided between the spouses.

Pension and retirement benefits can be considered marital property to the extent of the funds that were accumulated during the marriage.

Your Missouri family court judge will approve an equitable distribution of marital property. An equitable distribution does not necessarily amount to an equal distribution. Instead the court, along with the spouses and their attorneys, will attempt to divide the assets as fairly as the circumstances warrant.

The marital property designation can apply to most retirement plans, including pensions, a Simplified Employee Pension plan, 401k accounts, 403(b) accounts, and simple and traditional IRAs. In Missouri, vested and unvested pensions may be marital property. A vested pension can be divided upon the divorce.

An important exception is when one spouse has a retirement plan through the Public School Retirement System pursuant to Section 169.572 RSMo “in lieu” of accumulating credits towards social security benefits. In a 2003 case, In Re the Marriage of Woodson, the Supreme Court of Missouri held that benefits accumulated in the Public School Retirement System in place of social security benefits are not divisible.

Qualified Domestic Relations Orders

A qualified domestic relations order, commonly referred to as a QDRO, is the court’s directions to the administrator of a retirement plan for how the plan’s benefits are to be divided between the ex-spouses. QDROs can be used for qualified defined contribution plans and defined benefit plans, including SEPs (Simplified Employee Pension Plans) 457s and 403(b)s.

QDROs distribute pensions which may include in one of the following methods:

  • Shared interest – Both the pension-holder spouse and the non-holder spouse start receiving benefits at the same time;
  • Separate interest – The non-holder spouse receives benefits when he or she chooses; and
  • Qualified joint and survivor annuity – The non-holder spouse is granted survivorship rights.

It’s more effective when a QDRO is drafted as part of the divorce settlement so that the court can approve the QDRO when it enters the divorce decree. The QDRO must be written carefully. It must specify:

  • The name of each spouse;
  • The mailing address of each spouse;
  • The amount or percentage each spouse will receive;
  • The effective time period of the order; and
  • The pension plan it applies to.

Individual Retirement Accounts

When properly structured and executed, funds in an IRA account can be transferred from one spouse to an IRA account for the other spouse with tax-free consequences. It is crucial that transfers of pension and retirement accounts be written into the divorce plan in a clearly stated manner.

It is important that the transfer of an IRA is properly structured and executed to avoid tax penalties and postpone any taxes.

Contact A St. Louis Divorce Attorney

To ensure that your pension and retirement benefits are divided equitably, you should consult an attorney qualified to advise you on these matters. Call (636) 532-2300 today for a Free Consultation and speak with Jay Galmiche, a seasoned St. Louis Divorce Attorney with over three decades of experience. The Galmiche Law Firm, P.C. serves the areas of Chesterfield, Ballwin, Town & Country, and Wildwood, Missouri, along with surrounding areas.