Does New Jersey consider non-vested retirement benefits to be marital property?

By Cynthia Ann Brassington
August 30, 2017
Does New Jersey consider non-vested retirement benefits to be marital property?

Yes. All property, legally and beneficially acquired during the marriage or civil union, shall be subject to equitable distribution. Non-vested retirement benefits are still an asset and they are unvested until they become vested. So a lot of plans might say you vest after ten years. Let's assume for a second that you're in that plan for eight years during the marriage. But if that spouse remains in the plan, at some point they are going to vest and at some point it's going to become a viable asset. When that happens we have the qualified domestic relations order which will then define the plan benefits and what that spouse will receive upon retirement.

Sometimes people think that because it's not vested that it's doesn't have value, but it does have value, it goes back to the plans. When you have a pension plan that is fully funded by the employer, if it doesn't vest it's worth zero until it vests. You still want to have that qualified domestic relations order in place because the person may continue to work and vest that account.

If it's an employee-funded plan, that means that the employee is going to put in their percentage share and the employer puts in their percentage share and that builds, and then that eventually goes into the account and from those funds you are earning your pension. If you leave that plan before you vest, you're going to receive back the monies that you invested into that plan during the marriage so those funds, again, are subject to equitable distribution.

When we do the QDRO we include distribution of those funds so that in the event the plan does not vest and it's an employee-funded plan, then the alternate payee still receives his or her share of that account. It always comes down to the plan and that's why it's so important that you obtain a copy of the plan and you understand the plan because you're negotiating something and it should not be done in a vacuum.


New Jersey attorney Cynthia Ann Brassington is certified by the Supreme Court of New Jersey as a Matrimonial Law Attorney, and regularly helps people to resolve their divorce-related issues, from property division, to child support, and custody. To learn more about Cynthia and her practice visit www.LinwoodFamilyLaw.com.

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August 30, 2017
Categories:  FAQs

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