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). 

Typically, the former spouse would receive half of the marital share as equitable distribution of the pension when he retires. The officer, however, may not retire for several years and payment to the ex-spouse will only begin when he retires and goes into pay status. The statutory criteria of equitable distribution should be considered when dividing the retirement account (NJSA 2A:34-23.1). The Police and Fire Retirement System (PFRS) in New Jersey have very specific rules and procedures to address divisions of pensions. It is also important to know that PFRS pension payments will end upon the payor's death. Survivor benefits elected during the marriage will not be paid by PFRS after a divorce. This is a risk to the payee spouse to be taken into consideration. Life insurance should be considered.