As a responsible professional in Minnesota, you have probably spent much of your adult life putting money aside for your eventual retirement. It can take an entire lifetime of earning wages to cover the costs of medical care and other basic needs for someone after they retire.

If you find yourself facing divorce, worrying about financial consequences is common. The Minnesota courts often have the final say in how you and your ex will split up your assets and debts, as well as the custody of your children. Will you likely have to share your retirement assets with your ex?

Is your retirement account separate or marital property?

In order to determine if you have to split your retirement account, you first have to establish whether those assets constitute marital property or remain your separate property. It is common for at least a portion of the account to be marital property that the courts may divide.

Separate property is owned by one spouse, either because they held that property prior to marriage or because both parties have agreed via a prenuptial or postnuptial contract to treat certain assets as separate property. Otherwise, it is likely that the amount you’ve accrued in your retirement account during the marriage is subject to division. Deposits made prior to marriage will likely remain your separate property.

How do the courts split a retirement account during a divorce?

The exact way the courts divide your assets will depend on your family’s circumstances. Under equitable division rules, everything from the length of your marriage to child custody can impact how the courts divide your possessions.

The Minnesota courts can get relatively creative in how they approach a retirement account as part of the property division process for a divorce. Sometimes, the courts will determine the value of one spouse’s share and then give them other assets that have an equivalent value.

Other times, they might actually order a spouse to split the account itself. In the event that the courts order the division of the account, they will do so via a Qualified Domestic Relations Order (QDRO). When properly executed, a QDRO will permit you to split the retirement account into two separate accounts without incurring any taxes or penalties as you would for an early withdrawal.