187 South Old Woodward Avenue
Suite 250
Birmingham, Michigan 48009
Call Today (248) 540-3800
Divorce / Family Law Specialists
Ronald J. Bajorek
& Associates

Division of Pension and Retirement Accounts

Frequently Asked Questions

Much of my pension is premarital, so why should my spouse be entitled to ½ of my entire pension?
The answer is your spouse will not be entitled to ½ .  Rather your spouse will be entitled at best to 50% of that portion of your pension that accrued during the period of the marriage only.  For example if you worked for a company for 20 years and were married for only 10 of the 20 years then your spouse’s share would not be ½ of 20 years but rather ½ of 10 years being 25% share.  However, beware that this “coveture formula” as it is known is complex and tricky and should not be attempted without the expertise of the knowledgeable attorney and/or certified public accountant or it could result devaluing your benefits. 

Do retirement accounts include 401K’s, deferred compensation plans, IRA’s, SEPs (self-employment plans) and the like?

Yes.  These plans are generally easier to value and divide than pensions since there are current account statements available that can be used to do the calculations.  The premarital account statements are needed to separate any plan monies that the employee spouse earned/contributed prior to the marriage which arguably would be a non-marital asset not subject to division. 

Does the transfer of retirement assets pensions result in any tax consequences to either party? 

Yes and no.  Under Federal law the transfer or assignment of retirement plan assets between spouses does not create a taxable event nor does it incur any penalty.  However, once the retirement plan money is withdrawn by either party for personal use or when the non-employee spouse receives a pension distribution it is taxable to such recipient.  Accordingly, when a non-employee spouse receives money from a retirement plan it must be “rolled over” into a new plan or it will be subject to both penalty for early withdrawal and income taxes.

Will I still receive my share of my spouse’s pension when he or she dies? 

This is one of the most important issues that must be decided at the time of the divorce and at the time you elect to start receiving your benefits.   Federal law requires that most pension plans provide for a spousal survivor benefit.  In general, death benefit rights of a spouse end on death or on divorce of the participant.  However, Federal law permits a QDRO to treat an ex-spouse who is an alternate payee as the participant’s surviving spouse for purposes of these death benefits as well as any other death benefits offered by a plan.  Further, an alternate payee’s rights to survivor benefits may be in the same percentage amount as his or her rights to lifetime benefits so that it is possible that the former spouse is awarded 50% of the employee’s lifetime payments and 100% of all survivor benefits.   Of course, the cost of survivor benefits is imposed by reducing the monthly amount of the benefit payable to the non-employee spouse.  The non-employee spouse must be careful that the cost of the survivor benefit is shared between employee spouse and non-employee spouse in proportion and does not inadvertently reduce only the benefit of the employee spouse. 


Division of pension and retirement accounts are very complex with significant serious consequences if not done correctly.  When done properly these benefits can be a significant source of future security and income.  Consultation with an experienced attorney, CPA and/or financial advisor is essential and well worth the investment.

(248) 540-3800


Pension and retirement accounts are, under Michigan divorce law, considered marital assets which are subject to division.  This is true even though the non-working spouse contributed nothing to the accumulation of the pension and/or retirement plan.  
In a divorce settlement pension and retirement accounts are commonly divided by one of two methods:  (1) awarding the non-employee spouse an actual present or future portion of the retirement plan or (2) by awarding the non-employee spouse assets or property equal to their share of the current value of the retirement plan. 

In the first method the court will either enter a “Qualified Domestic Relations Order” (QDRO) in which the pension plan administrator is directed to assign a portion of the employee’s retirement benefits to the non-employee spouse.  The non-employee spouse is then eligible to have a portion of the employee’s monthly retirement benefits sent directly to him/her by the company plan administrator.  In the second method the retirement asset is calculated for its present day value, which value the non-employee spouse is awarded the equivalent value of marital property such as a greater portion of the equity of the marital home, a financial account or other property to offset the present day value of the retirement asset.   In this way the employee keeps all of the retirement asset in favor of trading off for another asset. 


Ronald J. Bajorek
187 South Old Woodward Avenue
Suite 250
Birmingham, Michigan 48009
Call Today (248) 540-3800
Located in the historic Birmingham Theatre Office Building 1 block south of Maple, in the heart of downtown Birmingham.

Providing comprehensive divorce representation throughout Michigan including cities of Bloomfield Hills, Birmingham, West Bloomfield, Franklin, Bingham Farms, Beverly Hills, Huntington Woods, Troy, Rochester, Rochester Hills, Novi, Southfield, Royal Oak, Farmington Hills, Clarkston, Livonia, Canton, Plymouth, Northville, Commerce, Milford, Brighton, Grosse Pointe, Sterling Heights, Bloomfield Twp., Shelby Twp., Macomb, Ann Arbor, Lake Orion, Oakland County, Wayne County, Macomb County, Washtenaw County and Livingston County among others.

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