Divorce can change how much money you have for retirement. If you or your spouse have a 401(k), pension or other retirement account, you may need to share some of those savings.
In Wisconsin, retirement benefits generally count as property that spouses must address during divorce. However, the amount each spouse receives depends on several factors.
How does Wisconsin divide retirement savings?
Courts start with the assumption that spouses should divide their property equally. This rule generally covers retirement accounts, even when only one spouse owns them. Retirement assets that may count toward property division include:
- 401(k) and 403(b) accounts
- Traditional and Roth IRAs
- Employer pensions
- Wisconsin Retirement System (WRS) benefits
However, a 50/50 split is not automatic. Courts may weigh how long the couple was married, each spouse’s financial circumstances and the assets they owned before tying the knot.
For example, a spouse who started saving before marriage may ask the court to consider those earlier contributions. Still, Wisconsin law does not automatically exclude premarital retirement savings from division.
How do spouses divide retirement benefits?
The process depends on the type of retirement plan. For many employer-sponsored plans, spouses need a Qualified Domestic Relations Order (QDRO). A QDRO tells the retirement plan how to distribute benefits between former spouses. Without the proper order, the plan may not release the funds as the divorce agreement requires.
The Wisconsin Department of Employee Trust Funds also requires a court order that meets its rules before dividing WRS benefits. These rules differ from those for many private retirement plans.
Meanwhile, IRAs generally do not require a QDRO. Spouses can transfer IRA funds under a divorce decree or related written agreement. Following the correct process matters because an improper withdrawal may trigger taxes or penalties.
How can you protect your retirement savings?
Before agreeing to divide retirement assets, review your account balances and pension statements. You should also consider how taxes and future benefits may affect the value of each account.
An attorney can help you understand Wisconsin’s property division rules and review the terms of your divorce agreement. Legal guidance may also help you avoid mistakes when transferring retirement funds and protect your financial plans after divorce.