The more assets you have, the more complex the property division of your divorce is likely to be.
Your retirement accounts will be a property division highlight. You will find that there are different rules for the division of different account types.
Understanding retirement account distribution
Dividing different retirement accounts calls for different paperwork. For example, a 401(k) requires a Qualified Domestic Relations Order (QDRO). This is a legal document confirming to the plan administrator that certain parties have a right to a portion of the account funds. Each pension or employer-sponsored plan requires a separate QDRO. Different tax consequences also apply when you take money out of retirement accounts, such as withdrawals from a traditional IRA versus a Roth IRA.
Looking at distribution options
There are various options for receiving retirement account distributions. You could roll assets into your own account through a direct transfer. You could also wait to take a distribution until the owner of the account retires, or you could cash out the portion of an account allotted to you.
Considering next steps
When determining the fair division of retirement accounts, the court will consider various factors. A judge will evaluate your financial circumstances as well as those of your soon-to-be ex-spouse. The judge will also look at the length of your marriage and your ability to earn income currently. However, you can control the outcome—save time and money, too—if you and your ex-spouse can work together to reach a fair settlement of your retirement accounts. Seek guidance from professionals to ensure you understand the distribution rules and tax implications.