Do you have questions about retirement benefits division after divorce in New Mexico?
In New Mexico, retirement benefits are considered marital assets and will be divided in a divorce.
With that said, if one of the spouses had a retirement account before getting married, the pre-marriage funds will remain the spouse’s separate property.
Has your separate retirement increased in value during the marriage? If so, you may also claim that the increased value remains separate property upon divorce.
Moving forward, the value accumulated during the marriage is then subject to division among both parties.
In cases where each party has their own retirement account, they may offset against each other with any remaining assets equalized. For example, a cash payment may be appropriate to equalize differences between retirement accounts.
Finally, both parties may agree to waive any interest from the other party’s retirement account.
IDENTIFYING RETIREMENT ACCOUNTS
First, it is important to consider what type of assets qualify as a retirement account. In New Mexico, common examples of retirement accounts include:
- 401(K);
- 403 (B);
- Individual Retirement Accounts (IRA);
- Deferred Compensation Accounts; or
- Pension.
WHAT HAPPENS TO MY NEW MEXICO PENSION AFTER DIVORCE?
In New Mexico, when two spouses decide to divorce and there are retirement assets such as 401(k)s, IRAs and pensions, those assets are divided up in the same manner as all other marital property.
This means that whoever contributed to the asset during the marriage will get half of what was accumulated. For example, if one spouse had a pension for 10 years prior to getting married but added more funds to it over the course of the marriage, then upon divorce they’d receive 50% of what they added during that period.
In other words, pension funds that were acquired during the marriage are considered marital property and must be adequately split between both spouses.
In New Mexico, retirement benefits earned by a person prior to marriage are not considered marital property – meaning the funds accrued upon retirement are kept separate.
After marriage, the portion of any pension or retirement account that is attributed to periods between your wedding date and the divorce will be divided and considered as community property, subject to division in a divorce.
To determine how much of a pension is considered marital/community property, an attorney or accountant may need to examine records detailing financial activity at the time of marriage.
OPTIONS FOR DIVIDING RETIREMENT FUNDS IN A DIVORCE
In New Mexico, when dividing retirement benefits during a divorce, equitable divisions do not always mean that the retirement accounts must be divided and split.
Some of the ways in which retirement funds can be divided include:
- A lump-sum payment to one spouse for their share of the account at the time of divorce;
- Agreement to waive an interests such as alimony, etc.; or
- A greater share in the marital home, or another asset, to offset the difference.
In New Mexico, determining how to divide retirement benefits during a divorce is up to you and your spouse.
In this regard, a Martial Settlement Agreement (MSA) is a divorce document that splits your retirement accounts. This MSA can contain any agreement between the spouses about retirement benefit division after divorce in New Mexico.
Settling out of court has numerous advantages. These benefits include saving money on legal fees, reduced stress, and control over your case’s outcome.
WHAT IS A QDRO IN ALBUQUERQUE, NEW MEXICO?
In the state of New Mexico, a Qualified Domestic Relations Order (QDRO) is the official document needed to divide retirement plans like 401(k)s. The QDRO outlines the division of funds as determined by either mutual agreement or court order.
The QDRO is used to divide retirement plan benefits between spouses after a divorce is finalized. In doing so, the QDRO allows for the equitable division of retirement benefit assets so that each spouse can receive their share. This share is either decided by the parties, or by the court.
QDROs commonly vary between financial institutions. In other words, each financial institution may have a different QDRO that is needed to divide the retirement account. Moreover, each QDRO may have specific requirements or unique language.
There are several problems that you may encounter when trying to finalize your QDRO. These problems include:
- The financial institution or plan administrator denies the submitted QDRO;
- The QDRO must be re-submitted after necessary corrections are made;
- Either spouse delays the process of approving the updated information and filing;
- The Court delays returning the QDRO;
- Delays occur with the plan administrator approving the QDRO.
NEW MEXICO’S RETIREMENT BENEFITS DIVISION DURING DIVORCE
Do you still have questions about retirement benefits division after divorce in New Mexico? Dividing retirement accounts can be a complex and touchy aspect of divorce.
You need a top Albuquerque divorce attorney that understands New Mexico law. Sanchez routinely handles contested and uncontested divorces in Rio Rancho, Los Lunas/Belen, Socorro/Estancia, and Gallup/Grants.
Call (505) SANCHEZ today.
In the meantime, check out this video to better understand how retirement accounts and community property are divided during a NM divorce.
