Divorce Retirement Questions in Michigan

By Anna Assad

If you're divorcing in Michigan, you may have questions about how your retirement plan and that of your soon to be ex-spouse will be divided. State law determines how Michigan will divide retirement plans upon divorce; however, judges are given leeway as to the division amounts.

Am I Entitled to My Spouse's Retirement Funds if We Divorce?

In Michigan, property that is considered marital property is subject to division in a divorce proceeding. Marital property is generally property obtained during the marriage. Non-marital property is property either spouse received before the marriage or by gift or inheritance. Retirement plans are usually considered marital property, even if the account or pension is held in one spouse's name only or was opened before the couple married.

How Much of the Funds Will I Receive?

Since Michigan law requires property division to be "just" and "equitable," how much you'll receive from your ex-spouse's retirement funds depends on the financial circumstances and needs of each of you. The judge will take many factors into account when dividing marital property. These factors include the size of the marital estate, ages of both spouses, how much each spouse contributed to the marital property, and length of the marriage. The judge uses these factors to divide marital property in a way that is fair to both parties. Property may be divided unequally between spouses but doesn't typically extend beyond a 60/40 division.

How are Awarded Retirement Proceeds Paid to a Former Spouse?

Retirement benefit payments to a former spouse may work one of two ways. The "in kind" or "deferred division" method gives the spouse interest in her former spouse's retirement plan. As with her spouse, she usually must wait until he's eligible to collect the retirement money to receive her share. The retirement plan administrator pays the former spouse directly, in accordance with the court order the plan administrator receives from the judge. The other method, "offset," doesn't award the spouse money directly from the retirement plan. Instead, she receives assets equal to the amount she's entitled to from the retirement plan.

Is Division Allowed for all Retirement Plans?

A Michigan judge typically divides a retirement plan using a Qualified Domestic Relations Order. The QDRO must be honored by retirement plans that fall under the Employee Retirement Income Security Act, which includes 401(k)s and private pensions, or the Internal Revenue Code.

Some types of federal retirement plans, such as those available for postal workers, and railroad, military and state worker retirements plans have special rules for divorce division. In Michigan, a judge must enter the appropriate order and follow certain rules when dividing retirements funds from one of these plans.

Can I Get My Spouse's Social Security?

You may be entitled to collect Social Security from your former spouse's benefits if you meet the Social Security Administration's requirements. However, since Social Security is a federal benefit, Michigan courts don't have the authority to address it as part of a marital property division action.