If you are going through the divorce process, you already know you will have to divide all marital assets. If you have retirement assets, these must be divided as well. Whether you are receiving or giving your spouse funds from your retirement accounts, however, the process can be complex and needs to be handled properly to avoid any early withdrawal penalties.
Dividing Retirement Assets
It is possible that not all of your retirement assets will be subject to division. Any funds you contributed before your trip down the aisle will be considered separate property. However, anything you contributed throughout the marriage will be split, unless you and your spouse are able to agree to another arrangement, such as offering an asset of equal value.
If you do not have another asset of equal value or simply cannot reach an agreement, you will need a qualified domestic relations order (QDRO) to split divide your assets without incurring any penalties. A QDRO is only designed to split assets in 403(b) and other qualified plans, so if you have an IRA account, you will need to use a transfer incident to divorce.
If you are receiving assets from your spouse’s retirement account, you can receive it in a lump sum, but you will owe both income tax and an early withdrawal penalty if you are younger than 59.5.
If you can afford to hold off on cashing out on your share of retirement benefits, there are other options you should consider, including:
- Roll over the retirement account
- Leave your share where it is
- Receive retirement payments (if you are a retiree)
Dividing retirement assets can be complex, so however you choose to receive funds, it is crucial to hire an experienced attorney to represent your case.
Set Up a Free Initial Case Review with a Skilled Family Law Attorney Today!
If you are getting a divorce and have retirement assets, you should not hold off on seeking knowledgeable legal representation to take on your case. At Garza Law Firm, LLLP, our divorce team has the experience and skill to help you navigate each step of the process. You can rely on us to protect your interests and create effective strategies to secure the best results for your case.
Reach out to our law office today at (214) 225-4344 to set up a complimentary one-hour case review with a member of our team to discuss the details of your divorce case.