What happens to retirement accounts in divorce?
As you go through a divorce, you will be concerned about what will happen to each and every asset. While many people pay most attention to the family home and bank accounts, there is something else to keep in mind: retirement accounts.
Generally speaking, retirement funds are treated as marital property for the purpose of a divorce settlement. As a result, you may be forced by the court to share these funds with your soon-to-be former spouse.
There are many types of retirement accounts that come into question, including but not limited to IRA, 401K and pensions.
If you don’t have any retirement accounts, this is not something you have to worry about. However, if you have money in one or more of the above, you will definitely find yourself asking questions about what will happen next.
Keep in mind that you must adhere to all tax laws when you make distributions, even if a divorce forced you into doing so. If you neglect to consider the tax implications, it could end up complicating your situation. That is not something you need as you go through divorce and try to pick up the financial pieces in the future.
The court will decide how property is divided in the event of a divorce. It is best to have a basic idea of what is to come, as this will help you avoid a confusing situation.
Don’t overlook the fact that retirement accounts will be taken into consideration during a divorce. This is something that both parties should be well aware of.
Source: FindLaw, “Divorce, Taxes, and Your Estate Plan,” accessed March 04, 2016