Those who have just gotten divorced are understandably ready to move forward with their separate lives. However, shutting the door on a previous marriage too quickly may have some unexpected consequences from a financial standpoint. A couple of tips related to property division may be helpful for protecting financial assets following a divorce in Pennsylvania, especially for those nearing retirement.
First, ensuring that all retirement plans are split based on the divorce agreement is critical. According to the IRS, a qualified domestic relations order, also known as a QDRO, is necessary to divide retirement fund plans between two spouses. The QDRO is court ordered and gives specific instructions for how the money is to be split.
In many situations, the QDRO needs to be presented to a retirement plan provider before a split is performed. Following up with the company to ensure that it has received and processed the document may be beneficial. Money can be taken from the retirement plan of an ex-spouse without having to pay an IRS penalty of 10 percent in this situation for those under the age of 59 and 1/2.
Getting divorced can be stressful and confusing financially and emotionally. Unfortunately, approaching a marital split-up too hastily can lead to making mistakes with property division that have long-term repercussions. A knowledgeable attorney in Pennsylvania can offer comprehensive guidance to ensure that the proper steps are taking to ensure a fair split of retirement funds and other assets, such as money in bank accounts, during this type of family law proceeding.
Source: forbes.com, “5 Retirement Moves For Recently Divorced Couples“, Marilyn Timbers, April 27, 2017