People who are going through a divorce know that they’ll have to divide their assets. One of these is the retirement accounts that they’ve amassed during their marriage. In some cases, this is one of the biggest assets that they have to handle during the divorce.
Dividing retirement accounts can be a complex undertaking. The type of account and the value can have an impact on what happens to it. One of the most important things to remember is that you need to have a proper valuation of the account to work with. You can’t just look at the current balance of the retirement account so don’t skimp on the valuation step.
As part of the divorce paperwork from the court, you’ll need to get a Qualified Domestic Relations Order if the retirement account is covered under the Employee Retirement Income Security Act. The QDRO allows you to roll the benefits over into a different retirement account without incurring a penalty. You can also pull the benefits out without rolling them over. The QDRO waives the penalty tax for early withdrawal, but you’ll still be responsible for the normal income tax on them.
Because the division of retirement assets is such a complex component of property division, it isn’t something that you should try to rush if you’re working out the split during mediation. If you’re unable to do this, the court will step in and determine how to divide the assets. Working closely with your attorney enables you to learn about the options and your rights so you can make informed decisions during this process.