Trusts and Estates

Combining Retirement Assets After Marriage

The sooner you and your spouse start planning for your retirement the better. You should try to make regular investing for your retirement a habit. There are special accounts and programs designed to help you save for retirement. The most common retirement plans and programs are: employer sponsored retirement plans, IRAs, company pension plans and Social Security.

Employer Sponsored Retirement Plans

If your employer offers a retirement plan you should sign up for it because this may be your best and the easiest way to save for retirement. A 401(k) and a Roth 401(k) are examples of work-based retirement accounts. Money will be deducted from your paycheck and go directly into your retirement account. If both you and your spouse participate in an employer-sponsored retirement plan, you should review each plan to determine which plan provides the best benefits.

If you can afford it, you should each contribute the maximum amount allowed under your own plans. Otherwise, choose the plan with the best benefits. Most employers will match a certain portion of the savings you put into an account. If both plans match contributions, determine which plan offers the best match and take full advantage of it because it's essentially free money from the employer. Also, compare the following:

  • Vesting schedules for the employer's matching contributions
  • Investment options
  • Whether the plans offer loans
  • Penalties for withdrawing money before retirement

When an employer contributes to your account, that money may not be yours to keep until you have been with the company for a certain length of time. Once that time period is over, the money becomes vested, which means that it is then yours to keep even if you leave the company.

Contributing money to a 401(k) gives you an immediate tax deduction and you may contribute up to a certain percentage of your total income before taxes. The amount you contribute will be tax deductible for the year in which you make the contribution. Typically, 401(k) plans offer many investment choices. Some 401(k) plans permit withdrawals for "hardship" reasons, such as medical emergencies, college tuition or to purchase a house. Some 401(k) plans also permit your to take out loans from the money that you have in your savings.

A Roth 401(k) combines certain features of a Roth IRA and a regular 401(k) account. While both the regular and the Roth 401(k) plans enable workers to save for retirement, there are important differences. Unlike the regular 401(k), a Roth 401(k) is funded with post-tax dollars. Participants pay the taxes out of current income, but the withdrawals will be tax-free. The tax-free provision of the Roth 401(k) applies only if the funds stay in your account for at least five years.


Individual Retirement Accounts, or IRAs, are special accounts with tax advantages to help you and your spouse save for retirement. Like employer-sponsored retirement savings accounts such as 401(k)s, they can offer big tax breaks.

There are two types of IRAs: A traditional IRA and a Roth IRA. Traditional IRAs allow you to save money without paying taxes until you take the money out of your account. The money you put into the IRA can lower your taxable income and grows tax-free while it's in the IRA account. Roth IRAs don't allow for deductible contributions but offer tax-free growth, meaning you owe no tax when you take your money out of your account. Your current financial situation and your expectations for the future will factor into choosing the type of account that is best for you.

Company Sponsored Pension Plan

A pension plan is a retirement plan, offered by some employers, that pays a set amount each year during retirement. Company pensions guarantee a specific amount of benefits to employees, calculated using a formula that typically includes your final salary, years of service and a fixed percentage rate. Depending on your company's pension plan rules, you may be eligible for a pension after a working for the company a certain number of years, usually 5 or 7. Most company pension plan benefits are paid out in the form of an annuity, which is a fixed monthly payment for the rest of your life.

Social Security

Social Security is part of the retirement plan of almost every American worker. When you work and pay Social Security taxes, you earn 'credits' toward Social Security benefits. The number of credits you need to get retirement benefits depends on when you were born. If you were born in 1929 or later, you need 40 credits, which is 10 years of work. If you stop working before you have enough credits to qualify for benefits, the credits remain on your Social Security record. You can add more credits if you start working again.

Your benefit payment is based on how much you earned during your working career. Higher lifetime earnings result in higher benefits. If there were some years when you did not work or had low earnings, your benefit amount may be lower than if you had worked steadily.

A person who has not worked or who has low earnings can get as much as one-half of her spouse's Social Security benefit amount if the spouse qualified for full Social Security retirement benefits. If you are eligible for both your own retirement benefits and for benefits as a spouse, your own benefits are paid first. If your benefits as a spouse are higher than your retirement benefits, you will get a combination of benefits equaling the higher spouse benefit. For additional information see the Social Security Online Website.

Questions for Your Attorney

  • Do you lose your retirement funds if the company goes bankrupt?
  • Should I and can I have an IRA if I have a company sponsored retirement plan
  • Can I transfer a traditional IRA to a Roth IRA?
Have a estate planning question?
Get answers from local attorneys.
It's free and easy.
Ask a Lawyer

Get Professional Help

Find a Estate Planning lawyer
Practice Area:
Zip Code:
How It Works
  1. Briefly tell us about your case
  2. Provide your contact information
  3. Connect with local attorneys

Talk to an Estate PLanning attorney.

How It Works

  1. Briefly tell us about your case
  2. Provide your contact information
  3. Choose attorneys to contact you