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How to Keep Your Pension in an Arizona Divorce

Posted On March 22, 2022 In Divorce

Arizona is a community property state. Therefore, both spouses share equitably in all property acquired, earned, and purchased during the marriage. This includes not only houses, cars, and tangible goods but also retirement assets like pensions, 401k, and IRA accounts.

While Arizona courts strive to divide property fairly and equitably, this does not always mean right down the middle. Many assets are impossible to split in two. Spouses are encouraged, whenever feasible, to engage in negotiations which may include asset trading and bartering to keep high-value assets, like pensions and marital homes intact.

However, when negotiations fail, courts must divide these assets on behalf of spouses. While homes may be divided by a forced sale or spousal buyout, marital portions of pensions are shared using a court-ordered QDRO through the pension plan’s administrator.

What is a QDRO?

A Qualified Domestic Relation Order or QDRO is used to divide non-governmental ERISA pensions. It is a court order that divides pension payments between spouses.

The amount each spouse receives of the pension depends upon:

  1. How much of the pension was earned by the employee spouse before marriage or after service of the divorce petition; and
  2. How much was earned during the marriage.

The QDRO directs the plan administrator on how to divide the pension account. It is important to note that retirement plans must comply with federal laws, and the court cannot include orders that are not in the plan.

QDROs are only for private ERISA plans. Government-sponsored retirement plans are handled by a different process called the Court Order Acceptable for Processing (COAP).

Considerations for Maintaining Your Pension

Although Arizona is a community property state, there are ways to avoid a QDRO and keep your pension whole. The first is to consider the length of your marriage. If you and your spouse were married only a short time, and your pension was accumulated outside of your marriage, it is primarily a separate asset.

Next, think about all of your marital assets. Although your pension is a significant asset, there are other assets in a marriage that may be of equal or approximate value. These include the marital home, investments, and real estate. Often spouses trade one or more of these to keep a retirement account intact.

If you and your spouse have a pension, you could both waive any interest in the pension of the other. If one account is more valuable, the difference could be made by supplementing one’s share of marital property.

There are several ways to negotiate with a willing spouse to keep your pension. For more ideas and expertise, contact an experienced divorce attorney in your area.

Contact an Experienced Divorce Attorney in Arizona

If you want more information about the division of pensions in an Arizona divorce, reach out to Wilson-Goodman Law Group, PLLC. Our Chandler divorce professionals will meet with you confidentially to discuss the current and future effects of any property division in your divorce.

At Wilson-Goodman Law Group, PLLC, we know how hard you work for your pension and what it means to your retirement. Call our skilled attorneys today and get practical, smart advice about keeping your money intact.