Dividing pensions and other retirement accounts upon divorce can be a very complex business. These assets can form a substantial part of your marital property, so it is crucial to take steps to ensure a fair and equitable division.
Dividing retirement assets
There are various assets to consider, including pension plans, 401(k) accounts, individual retirements accounts (IRAs) and Roth IRAs.
Pension plans. If a person has not yet retired, a pension can be difficult to divide, given the indeterminate value of the payout. A court order known as a Qualified Domestic Relations Order (QDRO) uses an equation to determine the proportions of the plan to be paid to the participating and non-participating spouse, respectively. In simple terms, each spouse is awarded one half of the monthly payment attributable to the marriage years. The participating spouse also receives the entire monthly payment for years following the marriage.
401 (k) plans. A QDRO is required to direct the plan administrator to allocate existing plan funds to a new account for the non-participating spouse. It is crucial that the QDRO - which the plan administrator must approve - is worded accurately to safeguard the tax status of the plan.
IRAs and Roth IRAs. The divorce decree sets down how a specific IRA is to be divided. When a spouse presents the decree to the bank, the bank moves the amount stated into a new account.
The trustworthy divorce lawyers at Hess & Jendro Law Office, P.A. have more than 40 years of combined experience in achieving optimal outcomes for clients in the divorce process. Contact us at 763.241.4855 to ensure a fair division of retirement assets upon your divorce.