Are Retirement Plans Considered Community Property?

One of the main questions we get when dividing assets and debts is, “are retirement plans considered community property?” Any retirement plan you have counts as community property, in part. This includes your 401(k), IRAs, and pensions.

The key determining factor is the length of the marriage while you were contributing to your retirement account. Remember that your income is community property. Using it to build up your retirement accounts make those community property too.

Let’s use the military as an example. Say you serve for 20 years and have a spouse the entire time. Then you divorce after you retire. The court considers your spouse fully vested. So they would get 50% according to community property rules.

If you serve for 20 years, marry 10 years in, then divorce after you retire it becomes a different story. Your spouse is 50% vested because they were with you for half your military career. This means they would get 25% of that retirement account. To clarify, if your spouse was with you for half the time you were building up the account, they would get 25%. Because they were married to you half of the time, they get half of the half.

Dividing retirement accounts can get tricky because of the time involved. Even if you are filing a joint petition, having a divorce attorney look over how you divide your assets can make sure everyone is getting what is due to them.

Attorney Peter James explains whether retirment plans are considered community property.