An increasing number of married couples are deciding to call it quits near retirement age. After all, by this stage of their lives, their children no longer live with them, so child custody is not an issue. However, the main issue is whether the divorce process, which involves property division, will prevent them from being financially prepared for their golden years in Pennsylvania.
During a divorce proceeding in Pennsylvania, a couple has to divide their assets in an equitable manner. These assets can include a 401(k) plan, an individual retirement account (IRA), 457 account, a 403(b) account or a pension. Unfortunately, a gray divorce, or a divorce that happens later in life, endangers both parties’ retirements, as the two individuals might end up living on only half of the income they had expected to receive during retirement.
The right moves, however, may help to make the transition easier for the two divorcing parties. For example, it is critical that they ensure that an IRA transfer is done properly. With an IRA, a qualified domestic relations order, or a QDRO, is necessary to transfer IRA funds without being subject to penalties and taxes.
Divorce can understandably be stressful for both emotional and financial reasons whether a person is planning to retire a few years or a few decades down the road. However, an attorney can provide the guidance needed to navigate property division as well as matters such as alimony. The attorney’s ultimate goal is to ensure that the individual’s best interests and rights are protected during all stages of the divorce proceeding.
Source: washingtonpost.com, “A ‘gray divorce’ can devastate your retirement plans. Here’s how.“, Michelle Singletary, March 26, 2018