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How do Indiana courts apportion retirement accounts?

On Behalf of | Mar 14, 2023 | Family Law

Individuals with significant assets often make diligent plans to ensure a comfortable life after retirement. Unfortunately, a divorce can jeopardize a nest egg and create other financial complications.

Divorce in Indiana is not as simple as an equal split of assets, meaning the outcomes vary in each case.

Equitable distribution in Indiana

Indiana courts seek to provide an equitable distribution of marital property during a divorce. The circumstances at the time of the split dictate how a judge divides assets or what kind of arrangement the judge will allow. Even if a couple has a prenuptial or postnuptial agreement, the court may discard the document if the conditions are patently unfair to one party.

The judge reviews each person’s needs and factors in current income and earning potential. Child custody can also affect the decision, as can the duration of the marriage. These variables could lead to the court apportioning one person’s retirement accounts among both individuals.

Alternatives to the court dividing a retirement fund

Complications with splitting a 401(k), pension or individual retirement account with an ex-spouse could make alternate arrangements preferable to both parties. For example, tax considerations are one element, as is access to the funds.

A divorce does not necessarily mean splitting or losing a retirement fund. A couple could develop their own agreement that does not have to be a mathematically even division but considers sentimental value and other preferences. When spouses can find a way to collaborate on property division, they may avert many difficulties.