Division of Pension Benefits During a Divorce in Maryland

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Maryland residents who wish to divorce may agree on how to divide their marital assets, including pensions. If a couple cannot mutually decide how to divide the property, Maryland courts will divide it by "equitable distribution" – the fair allocation of property – based on several factors.

Non-marital Property and Marital Property

Maryland family law considers property obtained during a marriage as "marital property," with the exception of property received by one spouse as a gift to another, an inheritance from a third party, or that which has a valid agreement exclusion. Marital property can include bank accounts, pensions and retirement assets, real estate, stock, cars and furniture.

Maryland divorce law considers property owned by a spouse before the marriage to be "non-marital." After divorce, non-marital property remains with the original owner. The state does not consider property acquired by a couple during the period they lived together before marrying as marital property.

When the marriage dissolves, if a spouse wants to claim a particular item as their own separate property, they must have proof that it is theirs alone.

Retirement Plans and Divorce

A retirement account, such as a pension, can be marital and non-marital. If a spouse has a retirement account that predates the marriage, the amount in the account before marriage is non-marital property. Any contributions to it after that are marital property.

The spouse claiming that a portion of their retirement account is non-marital must prove this to a divorce judge.

Retirement account division occurs much in the same way as the division of other assets in a divorce. A couple can agree to its division, but if they cannot reach an agreement, the court will divide the property through equitable distribution, a method of fair allocation of property. The court considers various factors when determining who gets what, including:

  • Each spouse's non-monetary or monetary contributions during the marriage.
  • Marital estate's total value.
  • Each party's finances at the time of divorce.
  • Fault grounds

why the parties wish to divorce. Length of the marriage. Spouse's ages at time of divorce. * Each spouse's physical and mental condition.

Property Division Through a QDRO

A qualified domestic relations order (QDRO) is one way to divide retirement assets under Maryland law. A QDRO authorizes an alternate payee to receive some or all of a spouse's pension. It can enable permanent or temporary support payments to the alternate payee an ex-spouse, spouse or dependent of the plan holder, or otherwise divide the accumulated retirement benefits.

A QDRO can have limitations. For example, if the funds in a plan were promised to another alternate payee via another QDRO, they cannot transfer to the person requesting them.

Transferring QDRO Funds

A beneficiary spouse typically contacts a divorce attorney to create a QDRO for transferring the funds, but a retirement plan administrator can have their own standardized form. After approval by the retirement plan administrator, the QDRO goes to the court for approval before the distribution of funds can occur.

While some retirement assets can rollover from one retirement account to another, with a pension, the recipient spouse can receive payments in the future tied to the working spouse's retirement. The working spouse's pension plan may also offer survivor benefits, trigger entitlement to health or life insurance, and cost of living adjustments (COLAs).