During a divorce, community property (both assets and debts) is usually divided equally between spouses. Sometimes this differs if there are certain stipulations in a prenuptial agreement or there was some unique circumstances surrounding the end of the marriage. When it comes to a 401(k) , a 403(b), pension plans, and IRAs, these might get divided in a divorce. That said, there are different rules and tax laws that apply to the type of retirement plan.
Having an experienced East Brunswick, NJ divorce attorney on your side can help protect your future during a divorce and plan ahead. Let’s consider some basics about retirement assets during divorce proceedings. We will be able to provide more insight during an in-person legal consultation.
Qualified Domestic Relations Order (QDRO)
A QDRO is used to divide a 401(k) and other qualified retirement plan assets between a spouse and an ex-spouse. Funds to the ex-spouse can be taken directly from the qualified retirement plan, though this is subject to taxable distribution. It is also possible to roll over funds to a traditional IRA, which is ideal for spouses who are older the 59 or do not require the funds immediately.
Transfer Incident to Divorce
One cannot simply take funds from an IRA and distribute them to an ex-spouse without filing the proper paperwork. That is where a transfer incident comes into play. This allows IRA funds to be transferred to a former spouse on a tax-free basis, and generally avoiding fees and penalties if distributed properly.
Social Security Benefits
A divorced individual who was married for 10 years or more may be able to receive social security benefits from their ex-spouse. In these situations, you would need to be unmarried, or your subsequent marriage has ended due to death, divorce, or annulment. Apart from being unmarried, these benefits are available if you are 62 years old or older, your ex-spouse receives social security benefits, and the benefits you receive are less than those you would receive from your ex-spouse.
Where Disputes Can Arise
Understandably, people can be extremely protective of retirement funds. Whether dealing with a 401(k), an IRA, or social security, a former spouse may be unwilling to part with these funds as part of a divorce. Emotional and angry exchanges may occur when these retirement funds are at stake, leading to lengthy and bitter divorce proceedings.
How a Divorce Attorney Can Help
Given how fraught these matters can be, working with a skilled divorce attorney can help keep this process as smooth, objective, and as businesslike as possible. Your lawyer will always keep your best interests and your children’s best interests in mind while also focusing on fairness. Offering other assets or taking on community debt may be considered as a way to help protect your retirement plan.
Do not go it alone when getting a divorce. Experience and insight are necessary to ensure the most ideal outcomes.
Learn More About Issues During Divorce Proceedings
For more information about dividing assets and debts during a divorce and other matters related to these sorts of proceedings, be sure to contact the Law Offices of Jeffrey W. Goldblatt Esq. We will discuss these matters with you in greater detail during a legal consultation.