Retirement plan divisions in the event of a divorce require the identification and valuation of all marital property retirement plans. Deciding the fraction of retirement plans that are marital property is just the first step when an order is constructed for the division of marital property. The final step is dividing and awarding shares of the retirement plans through a document called the Qualified Illinois Domestic Relations Order (QIDRO).
The following will focus on how retirement plans are deemed marital property and how the awarding of marital property retirement plans is accomplished using the QIDRO.
How are retirement plans deemed marital property?
The part or portion of a retirement plan that is deemed marital property is defined in 750 ILCS 5/503(b)(2) which says:
“For purposes of distribution of property pursuant to this Section, all pension benefits (including pension benefits under the Illinois Pension Code, defined benefit plans, defined contribution plans and accounts, individual retirement accounts, and non-qualified plans) acquired by or participated in by either spouse after the marriage and before a judgment of dissolution of marriage or legal separation or declaration of invalidity of the marriage are presumed to be marital property.”
This means that if a couple has been married for 10 years, but a retirement plan was in existence for 20 years, the portion that would be divided as marital property would be the benefits earned over the 10 years of the marriage. The statute goes on to say that a spouse can refute the presumption of marital property by presenting evidence that:
- All or a portion of the plan was obtained by gift or legacy.
- All or a portion of the plan was obtained in exchange for assets obtained before the marriage.
- All or a portion of the plan was obtained after a judgment of legal separation.
- All or a portion of the plan was obtained during the marriage but excluded by a premarital or postnuptial agreement.
The division of marital property retirement plans as determined by a QIDRO
Once the division percentages on all or portions of the retirement plan are determined, a QIDRO will need to be constructed in accordance with 40 ILCS 5/1-119 to be presented to the retirement plan’s administrator for implementation of the ordered division. In addition to establishing the QIDRO, the Consent To Issuance Of QILDRO will have to be completed as well.