For those going through a marital split-up, one of the biggest concerns may be retirement. This is particularly true for those getting divorced near retirement age in Pennsylvania. A couple of tips may help with navigating property division when addressing the retirement funds in a 401(k) and/or IRA.
When dealing with a 401(k), obtaining a QDRO — or Qualified Domestic Relations Order — can be helpful for apportioning it properly. The QDRO is a legal document outlining how a retirement plan that an employer sponsors will be divided. This tool can help with avoiding penalties and taxes that otherwise may result from pulling money from a retirement plan early.
An IRA does not require a QDRO when it comes to allocating the assets in the account. Instead, IRA funds are divided based on the particular divorce agreement that two spouses reach. Money can be moved directly from the account into a spouse’s current IRA or new IRA. As long as the money is transferred, not distributed, there will be no penalty or tax.
The best method for dealing with property division is for two spouses to agree on how to divide these assets at the negotiation table or through divorce mediation, for example. These alternative processes to litigation can be less stressful and costly than going to trial. However, going to trial is inevitable if the spouses cannot settle their disputes on their own. An attorney can help to ensure that one’s fair share of retirement assets and other property is attained during a divorce proceeding in Pennsylvania.
Source: madison.com, “How to Split These 7 Assets During a Divorce“, Maurie Backman, Dec. 7, 2017