Characterization, Division & Allocation of Retirement Plans

What Factors Do the Courts Analyze in Characterizing and Valuing Retirement Plans?

California divorce courts may characterize and value retirement plans in a divorce based upon the following factors, depending on the details of each specific plan:

• Type of plan;
• Increase in plan value during the marriage;
• Contributions to the plan during the marriage;
• Specific contractual terms of the plan;
• Performance of plan assets;
• Age of the employee;
• Years of employment before and after the marriage;
• First possible retirement date; and
• Survivorship options

California divorce courts generally allocate retirement plan benefits between separate property and community property according to when the benefits were earned. Benefits “earned” during the marriage (after the date of marriage and before the date of separation) are generally characterized by divorce courts as community property. Benefits “earned” before the date of marriage, or after the date of separation, are generally characterized as separate property. Complications may occur relative to dividing the earnings of the plan assets or when records are missing, when valuing a defined benefit plan.