For couples considering divorce, few decisions have more long-term financial implications than what happens to retirement assets during divorce. Because Wisconsin is a community property state, marital assets are generally divided equally. But “equal” rarely means simple. Dividing retirement accounts in a divorce comes with unique challenges that can significantly affect your financial future if handled incorrectly.

The experienced family law attorneys at Muter Law Office, LLC, know how to classify, value, and transfer retirement assets during a Wisconsin divorce, and can ensure your financial future is protected.

What Counts as Marital Property in a Wisconsin Divorce?

Because Wisconsin is a community property state, almost all property acquired during a marriage is considered marital property, meaning it is owned equally by both spouses, regardless of whose name is on the account. However, there are some important exceptions. Property owned by one spouse before the marriage or received as a gift or inheritance is generally considered separate property and is not divided. Because most retirement accounts are built up during the marriage, these assets are generally presumed to belong to both spouses and are subject to division, regardless of whose paycheck funded the account.

What Retirement Accounts Can Be Divided in a Wisconsin Divorce?

Three categories of retirement accounts are generally at issue in a Wisconsin divorce.

Defined Contribution Plans

These retirement accounts require employees to contribute a fixed portion of their paychecks. They include:

• 401(k) Plans. Employer-sponsored retirement plans that direct a portion of an employee’s pre-tax salary into a retirement account.
• 403(b) and TSA Plans. A 403(b) is a type of Tax Sheltered Annuity (TSA) that allows employees of public schools and tax-exempt organizations to save for retirement through contributions from employees and employers.
• IRA, Roth IRA, and SEP Plans. IRAs, Roth IRAs, and SEP IRAs are retirement accounts that allow individuals to take advantage of various tax breaks by contributing to a retirement plan.

Defined Benefit Plans

Defined benefit plans, or pension plans, are employer-sponsored retirement plans in which an employer agrees to make specified payments that are calculated using factors such as an employee’s salary and length of employment.

Social Security Benefits

In some instances, social security benefits are treated as marital property. In Wisconsin, when a marriage lasts longer than 10 years, a divorced spouse may be eligible for social security benefits based on their ex-spouse’s earning record. To qualify, an individual must be at least 62 years old and unmarried.

Methods for Dividing Retirement Assets During Divorce in Wisconsin

Retirement accounts are not automatically divided during a divorce. However, a spouse is entitled to them when a request is made. Wisconsin courts use one of two methods when dividing retirement accounts during divorce.

Qualified Domestic Relations Order (QDRO)

A Qualified Domestic Relations Order (QDRO) is the more common method of dividing retirement accounts during divorce. The Order designates a former spouse as an alternate payee who receives a percentage of retirement benefits. The QDRO should identify the specific percentage the alternate payee should receive and when they will begin receiving payments.

Offset Method

The offset method provides a former spouse compensation from other sources in exchange for their portion of retirement accounts.

Factors That May Influence Division of Retirement Accounts During Divorce

Because Wisconsin is a community property state, retirement accounts that qualify as marital property are presumed to be divided equally during divorce. However, the court may divide retirement accounts differently depending on factors such as:

• The duration of the marriage
• Non-marital assets one spouse possesses
• The value of the spouse’s own retirement accounts
• Pre- or post-nuptial agreements that address the division of retirement accounts

Steps to Ensuring a Fair Division of Retirement Accounts During Divorce

Our experienced family law attorneys can develop a property division plan to ensure a fair division of retirement accounts during divorce.

1. Begin by creating a list of assets and identifying which spouse should receive them in the divorce.
2. Determine the value of the property.
3. Evaluate whether the property is marital property or separate property. For assets claimed to be separate property, be prepared to prove the date it was acquired, how it was paid for, and how it was kept separate during the duration of the marriage.
4. Calculate marital debt. Joint debt will be split evenly between the parties, while individual debt not used for marital purposes will be the responsibility of the spouse who owes it.
5. Develop a property settlement agreement that identifies each asset and debt, their values, and who owns them.

How the Family Law Attorneys at Muter Law Office Can Help

At the Muter Law Office, we understand how important it is to protect your financial future during a divorce. Our family law attorneys are committed to helping you understand your rights, negotiating fair settlements, and protecting your interests. We know how to handle the division of retirement accounts and other assets during divorce, and will help you make informed decisions to achieve a successful resolution.

Contact Muter Law Office Today

Contact us today to schedule an appointment to discuss how we can help you handle property division during divorce. We will answer your questions, explain your rights, and help you take the next steps with confidence.