Equalizing Retirement Accounts

Why did you send this information to me?

This information is being provided to you because your divorce judgment or settlement agreement directs that two or more defined contribution retirement plans - such as 401(k) accounts, 403(b) accounts, annuities, and IRAs – are to be “equalized” or divided using the least number of domestic relations orders. This means that instead of preparing a separate order dividing each account, the value of all accounts will be added together, divided in half, and an amount necessary to ensure that the party with less funds has the same as the other party will be transferred to him or her from (ideally) one account belonging to the party with more funds.

Can you give me an example?

Spouse A has an account with a balance of $100,000 and Spouse B has an account with a balance of $50,000. Adding the account balances yields $150,000, so each party must end up with half this amount, or $75,000, to equalize the accounts. To accomplish this, an order will be prepared which transfers $25,000 from Spouse A’s account to Spouse B. Spouse A will retain the balance in his or her account and Spouse B will retain his or her entire account. This same methodology will apply regardless of the number of accounts being equalized.

What information do you need from me?

Your divorce judgment or settlement agreement will specify the “valuation date,” which is the date used to value the accounts being equalized. This is usually, but not always, the date of divorce. We will require account statements or other documentation showing the balance on the valuation date for each account that is being equalized. In many cases, the judgment or settlement agreement provides that only the “marital portion” of the accounts are to be equalized. If this applies to your case, then for each account that existed prior to the marriage, we will also require an account statement or other document which establishes the account balance on your date of marriage.

Please keep in mind the following:

• We have no authority to obtain your account information from your employer or the company with which your funds are held, nor do we have the authority to compel any party to submit to our office the requested information.
• We have no authority to deviate from the terms of your divorce judgment or settlement agreement. For example, if the specified valuation date is March 7, 2024, then you must provide the balance as of March 7, 2024, and not some other date that is “close” to that date.
• Unless the valuation date falls on the beginning or ending date of an account statement, we cannot use the statement to determine the account balance as of another date during the statement period. For example, if the valuation date is March 7, 2024, and you provide a quarterly statement for January 1, 2024, through March 31, 2024, we will not be able to determine from this statement the account balance on March 7, 2024. In such a case, you may be able to obtain the March 7 balance by logging into your online account or requesting the information from the company with which your funds are held.
• We cannot accept an account balance which is “as close as you can obtain” to the relevant date. If you are unable to obtain the account balance as of the date in question, it is your or your attorney’s responsibility to communicate with the opposing party to explain the situation and determine whether you can agree to use the balance that you are able to obtain.