If you have chosen to get a divorce, you will need to address multiple types of financial issues, as well as the legal matters involved in dissolving your marriage. The process of property division can often become complicated, especially if you and your spouse own multiple and different types of property and assets. Retirement benefits are an issue that sometimes can complicate this process, and determining how to divide these assets correctly can ensure that you will have the financial resources you need later in life.
Retirement Accounts, Pensions, and QDROs
Generally, any retirement benefits you or your spouse earned or contributed to during your marriage are part of the marital estate. They will need to be divided alongside your other marital property. These benefits may include retirement accounts provided by an employer, such as a 401(k), or an individual retirement account (IRA), as well as pension benefits earned while you were married.
In many cases, a spouse will be able to keep retirement accounts that are in his or her own name. However, the funds in these accounts may be divided by withdrawing or transferring some of the balance. It is important to understand that if you choose to withdraw funds from a retirement account before reaching the age of 59 ½, penalties may apply, and taxes also must be paid on the amounts that are withdrawn or transferred.
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