Retirement accounts, pension plans, and social security benefits are significant factors in negotiating a divorce settlement. These retirement assets can account for the majority of a couple’s net worth, especially if they are getting a divorce after a decades-long marriage.
There are numerous factors, as well as tax implications, to consider when retirement accounts and pension plans are divided. For one, the applicable law can vary depending on what is being divided. For IRAs, Florida laws govern the division. However, the division of 401(k) and 403(b) plans must follow federal law. Forbes suggests 4 things to keep in mind when dividing retirement savings in a divorce;
Retirement funds added during the marriage are usually treated as marital property.
Division of a 401(k) plan and many pension plans require a Qualified Domestic Relations Order (QDRO). The requirements for QDROs can vary depending on whether the pension or retirement plan is a military, federal, state, county, or city one.
The QDRO must be completed and presented to the pension plan well before the divorce is finalized. There are certain risks if it is not. For example, the election of a lump sum payment could be rejected by the pension plan, or the spouse could die after the divorce was finalized but before the pension plan approved the QDRO.
A QDRO specialist can help you avoid mistakes.
Given the complexity of dividing retirement assets during a divorce, it is crucial to obtain legal guidance from an attorney who is experienced in these matters. Experienced Clearwater attorneys have the skills and financial background to effectively represent your interests.