If you are ending your marriage, you know you will have to divide all of your marital assets. Of course, this will include your retirement assets, such as your 401(k) or pension plan. However, depending on when you began accumulating your assets, you may not necessarily have to divide all of it. Continue reading to learn more about what happens to retirement assets in a divorce.
Splitting Up Retirement Assets
Retirement assets will play an important part in your future, so it is important to understand your options when it comes to dividing them during the divorce process. Any retirement assets you had before your marriage will be treated as separate property. However, anything you accumulated during your marriage will be treated as community property. To divide retirement assets without suffering an early withdrawal penalty, you will need a Qualified Domestic Relations Order (QDRO).
A QDRO is not suitable for all assets, so if you do not have an IRS tax-qualified plan that is covered by the Employee Retirement Income Security Act (ERISA), you will not need a QDRO. That said, if you and your spouse can agree on a different arrangement, you may not necessarily have to divide your retirement assets. For example, you can offer your spouse another asset of comparable value to avoid splitting your retirement assets altogether.
Additionally, there are a variety of ways to receive a retirement payout and, depending on your needs, one of these options may be better than the others. However, keep in mind that if you withdraw any money from a retirement plan before the age of 59 1/2, it will trigger a 10% tax penalty as well as regular income tax.
Reach Out to Our Knowledgeable Divorce Team for a Case Evaluation Today!
If you are getting a divorce and have concerns about dividing your retirement assets, the skilled family law team at Labovitz Law Firm, our team is backed by more than 16 years of legal experience and is committed to providing open and honest communication. You can rely on us to advise you of your options, so you can make the best possible decision for your circumstances.
Call our law office today at (817) 374-4056 to set up a free case review with a skilled member of our team to discuss the details of your divorce and how you can protect your retirement assets.