Divorce is a lengthy and both emotionally and financially stressful process. Financial planning through divorce can be complex, and there are professional lawyers that can help you through this. There are often many questions that arise in times of divorce, including those about your growing retirement funds. If you’re concerned about whether you could lose your retirement funds during a divorce, there are some things you should know.
How Retirement Plans Work
Retirement plans are often sponsored by your employer. Each paycheck, you have the opportunity to contribute a certain percentage of your earnings to the account, and you may begin withdrawing funds during your retirement. In a divorce, assets are typically divided to suit both parties equally unless a prenuptial agreement is in place. With retirement accounts, you may be required to divide the funds if alternative assets are unavailable.
Do You Have Alternative Assets?
In a divorce, assets are divided to suit both parties financially and ensure their qualities of life remain the same post-divorce as they were pre-divorce. Most of the time, any assets obtained after a marriage certificate is verified is considered marital property. All of these assets are typically up for division during divorce, including any retirement savings accounts.
How Retirement Plans are Split in Divorce
If both parties involved have individual retirement accounts of similar value, each may agree to maintain their separate accounts. However, if one party doesn’t have a retirement plan in place, or if the funding in each individual account is uneven, it might be a source of division. This goes both ways, meaning both parties’ retirement accounts can be drawn from to divide assets. When one spouse was the primary earner, the other party might desire to protect their retirement account and prevent their employer from releasing benefits to the ex-partner. This is where a QDRO comes into play.
What is a QDRO?
A QDRO is a qualified domestic relations order. It is a type of legal court order that can potentially ensure that the division of assets during a divorce occurs with pre-specified allocation. This also prevents funds from being withdrawn with penalties as well if over 59 ½. QDROs are complex legal documents and require specific language and phrasing to function properly, so many people who desire them often confer with legal aid throughout the divorce process.
Your Retirement in Divorce
No two divorces are the same, as all individuals carry vastly differing assets. This makes each process unique and individualized, thus difficult to determine exactly whether one person will lose a portion of their retirement funding or not. One safe way to protect yourself from the potential retirement loss is through hiring a lawyer. The professionals at the Comunale Law Office can walk you through asset division during divorce. Contact us today for a free initial consultation to discuss how we can best help you through your divorce.