Retirement plans are assets that parties often acquire during a marriage which can be divided through equitable distribution in a divorce. Pensions are defined benefits that provide a specified monthly benefit at retirement. Defined contribution plans, typically 401ks, are lump sum retirement plans funded by the employee, employer, or both, and are invested in the market subject to fluctuation. There are other retirement plans, i.e., IRAs, 403(b)s, stock ownership, and profit-sharing plans. However, two of the most common retirement plans addressed in a divorce in New Jersey are the pension and the 401k. Typically, the marital share of the retirement fund is divided. This share is also known as the coverture fraction.
For example, a police officer starts working in 1995. He marries in 2000. He files a complaint for divorce in 2015. At the time of the divorce when calculating the marital share, it will be 15 years. However, this “marital share” will be multiplied by his final benefit at the time of retirement which may for example be 25 years. The exact figure of the benefit is not known at the time of divorce. This is known as the “Marx Formula.” Marx v. Marx, 265 NJ Super 418 (Chancery Div. 1993).
