Retirement accounts, such as pensions or 401(k)s, can play a dual role when getting a divorce: they can be classified either as income or as an asset, and sometimes as both. The way these accounts are categorized has significant ramifications for how they are divided in a divorce settlement.

Classification of Retirement Accounts in Colorado

• As an Asset: In Colorado, retirement accounts like 401(k)s, IRAs, pension plans, and military pensions are generally considered marital property if they were accumulated during the marriage. These accounts are subject to Colorado's equitable division standards, meaning they will be divided in a manner deemed fair by the court.

• As Income for Spousal Maintenance (Alimony): According to the Colorado Uniform Dissolution of Marriage Act, certain types of retirement benefits that are actually received and have not been previously divided as property can count toward a spouse's gross income for the purpose of determining spousal maintenance, commonly known as alimony in other jurisdictions. This is outlined in C.R.S. § 14-10-114 (8)(c)(I)(H).

Key Legal Provisions in Colorado

• Double-Dipping Prevention: Once a retirement account is divided as an asset, it cannot also be counted as income for spousal maintenance. This is to prevent "double-dipping," where the same asset is counted twice in financial determinations.

• Modifiability of Spousal Maintenance: In Colorado, non-contractual spousal maintenance is modifiable. If circumstances change, such as a spouse beginning to receive retirement income, a motion can be filed to modify alimony payments.

Scenarios to Consider

• Not of Retirement Age: For couples who are not yet drawing from their retirement accounts, these will be divided as assets. However, the court may consider the distribution of these assets when determining spousal maintenance.

• Of Retirement Age: For older couples, if one spouse is already receiving retirement benefits, those will count as income for spousal maintenance calculations. If a spouse plans to draw from retirement accounts after the divorce is finalized, the court may or may not consider this in maintenance determinations, depending on the specifics of the case.

Takeaway

Given the complexities of Colorado law regarding retirement benefits and spousal maintenance, as well as the potential for lifetime spousal maintenance in long-term marriages or when one spouse cannot support themselves, it's strongly advised to consult a family law attorney for tailored guidance.

By understanding these nuances, you can better navigate the financial intricacies of divorce in Colorado, particularly as they relate to retirement accounts and spousal maintenance.

For more information read our article Retirement Benefits Can Count as Income for Alimony Determinations