Are you planning to end your marriage in Illinois? This step will lead to a major change in your life, but first, there will be many issues that need to be brought to a satisfactory conclusion. One is the status and possible division of your pension plan. Here is how this division may occur.
Dividing a defined benefit plan after divorce
The first thing you will need to do before you divorce is ascertain that your pension is a defined benefit plan. If this is the case, you will be guaranteed a monthly benefit when you reach the age of retirement. Your plan may also be a defined contribution fund. In this case, its value depends on how well an investment fund is doing.
If your plan is a defined benefit plan, you can then estimate your remaining life expectancy. The value of a plan depends on how long you will receive benefits after you retire. You can deduct your retirement age from your expectancy and multiply the result by your guaranteed annual benefits.
Ensuring a fair division after you divorce
Your retirement benefits and other finances may be subject to division after you divorce. It’s important to make sure the split is one you can afford. You and your spouse will need to agree on a fair division of your retirement pension plan if you are ordered to do so by the court.
You and your spouse need to agree on the future value of your pension. This will take into account such factors as inflation and whether you will live to retirement age. This will help determine the total amount that your spouse receives.