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Divorce and Retirement Accounts: Protecting Your Future

By Saunders Law Group on July 12, 2018


Dividing property in a divorceDuring a divorce, former spouses will divide debts and assets. This typically leads to disputes over real estate property, shared vehicles, and even the amount of debt one spouse will take. This division of property may even impact your retirement funds.

The divorce attorneys at our Bartow, FL law firm would like to consider how a divorce affects your 401(k), pension, IRA, and social security benefits. We’ll also mention why working with an attorney is helpful during these matters.

Qualified Domestic Relations Order (QDRO)

When dividing a qualified retirement plan such as a 401(k) or pension, the use of a QDRO will be necessary. Using a QDRO, the funds can ben taken directly from the qualified retirement plan and given to the ex-spouse, though the funds would be subject to taxable distribution. It is also possible to roll these qualified funds over into a traditional IRA, which is an ideal option for spouses who do not require the fund immediately and meet certain age requirements.

Transfer Incident to Divorce

When dealing with retirement funds such as traditional IRAs, proper paperwork must be filed before the funds can be transferred to a former spouse. This is when a transfer incident is necessary. A transfer incident will allow IRA funds to be transferred to a person’s former spouse on a tax-free basis. The transfer incident can also help avoid penalties and fees on these funds in the process.

Social Security Benefits

If a marriage lasted at least 10 years, an individual may be able to receive some social security benefits from their former spouse following a divorce. This individual would have to be unmarried, or their subsequent marriage has ended due to death, annulment, or divorce. Additionally, the individual would have to be 62 years old or older, and would earn less in current social security benefits than they would from the ex-spouse’s social security benefits.

Where Disagreements May Occur

Given the state of retirement today, it’s no surprise that people can be extremely protective of their retirement plans and assets. And rightfully so. Disputes often arise on being denied assets that are rightfully due to you, or when an ex-spouse oversteps laws and attempts to deplete the retirement funds of the former spouse.

Disputes and disagreements over retirement funds can lead to frustration and anger, which makes these kinds of legal issues even harder to address without the insight of an experienced legal expert.

How Our Divorce Attorneys Can Help

Working with a divorce attorney may be essential for you to protect your retirement. It may even help ensure you can afford to retire. Your attorney will note current laws regarding the division or retirement funds and determine if your ex-spouse does have a claim on these retirement assets.

The goal will be to ensure a smooth and objective process, avoiding hurt feelings and past resentments whenever possible simply by sticking to the rule of law. This sort of peace of mind can be invaluable as you plan for your future.

Learn More About Divorce Law Matters

For more information about dividing assets during a divorce and what to expect from the process, be sure to contact the attorneys of Saunders Law Group. We are here to help you make these matters easier to understand, and to guide you through the process.

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