I’m Divorcing, What Happens To My Retirement Accounts?
A variety of assets need to be analyzed and divided during a divorce, and this includes retirement accounts. Divorce can be stressful emotionally and expensive financially. You may be under a lot of pressure, particularly when it comes to deciding how to divide assets, including retirement accounts.
In Pennsylvania, retirement accounts are considered marital property, which means they are subject to division when a marriage ends. A Bucks County family attorney can provide the guidance and support you need to ensure a fair and equitable division of assets. If you are facing divorce and have retirement accounts to divide, contact an experienced attorney to discuss your options
Retirement Accounts and Pennsylvania Divorces
Pennsylvania is an equitable distribution state, which means that marital assets, including retirement assets, are divided fairly between the spouses. It is important to understand that fairly does not always mean equitably. Retirement accounts, including 401k accounts, IRAs, pensions, and other types of retirement plans, are marital assets if they were acquired during the marriage.
When retirement accounts are being assessed and divided, a court will consider several factors, including:
- How long the couple has been married
- What were the contributions of each spouse to the union
- Each spouse’s current income and possible future earning potential
- What the age and health is of each spouse
- The value of the retirement accounts
How the division will occur will depend on all of these factors.
Deferred Distribution or Splitting Account Balances Equally
There are a few different ways retirement accounts can be divided in a Pennsylvania divorce. One option is to split the accounts equally, which means each spouse receives 50% of each retirement account balance. This is known as a pro rata division.
Another option is to use a deferred distribution, which means that one spouse retains ownership of the retirement account, but the other spouse is entitled to a portion of the account when the account owner retires or reaches a certain age.
An experienced divorce attorney will work to ensure that retirement accounts are accurately valued, so they can be divided fairly. And they will work to negotiate a settlement that protects your interests and ensures that retirement accounts are divided fairly. This may involve negotiating a pro rata division or a deferred distribution, depending on your circumstances.
There may be documents beyond your divorce agreement that need to be handled. For example, your Bucks County family attorney could draft a Qualified Domestic Relations Order (QDRO). A QDRO is a legal document that allows retirement account funds to be distributed to a non-account holder, such as a former spouse. When they are well-crafted, a QDRO ensures the division of retirement accounts complies with IRS rules and avoids unnecessary taxes or penalties.
Are you worried about how a divorce will divide your retirement accounts? Dividing retirement accounts in a Pennsylvania divorce can be complex, but an experienced attorney can help you navigate the process and protect your interests. Discuss the details of your situation with the legal team at Kardos, Rickles & Hand. Explore your options, call 215-968-6602.