Divorce can be expensive, and unless you are mindful about your retirement account, it could be at risk. A qualified divorce attorney can help you protect your retirement as your divorce proceeds.
First, look for an attorney who has years of experience working with couples who had many assets that required division. Your attorney should have worked with other clients who needed help separating their retirement accounts.
It’s important to gather all your financial information pertaining to retirement accounts. Find descriptions and summaries about you or your spouse’s 401(k) and pension accounts, traditional or Roth IRA accounts, savings accounts, money markets, certificates of deposit, and other financial assets related to retirement.
Think about past jobs which you or your spouse held. There may be money available that you haven’t considered in a while. Every bit of financial information is helpful to your attorney, who will help you maximize available dollars for retirement.
This will not only help you learn how much money is available for retirement, but also help you learn how much you have available to pay your attorney fees and start a new life. Many people are tempted to dip into their retirement funds to cover these additional expenses. Yet if you do this, you risk shortchanging yourself in future years when you are not generating income.
If you decide to withdraw from your 401(k) plan before age 55 or from IRA funds before age 59 ½, the government requires you to pay both taxes and a 10% penalty if you haven’t been ordered by a judge to divide marital assets. You have only one opportunity to make this withdrawal, so carefully consider if this is the right choice for you. Make sure to withdraw only what you need, because you may not have the time or opportunity to replace the money.
Usually, it’s better to liquidate possessions or borrow money from friends or family to pay your additional divorce expenses. You will protect your retirement funds and keep your credit from being damaged.
Equitably Dividing Retirement and Savings Accounts
A qualified attorney can help you understand how to equitably divide your retirement and savings accounts. They will clearly state the asset separation in the divorce decree. Some plans, like 401(k) and pensions, are split according to a Qualified Domestic Relations Order, which permits you to roll assets into your own plan without paying taxes or penalties. According to tax code, traditional and Roth IRA assets can be split within one year of the divorce.
Your divorce attorney will also help you understand your Social Security benefits. If your marriage lasted at least 10 years, you are eligible to claim benefits from your ex-spouse, even if they remarry. You will qualify for monthly withdrawals at age 62, and you can receive your portion of your ex-spouse’s benefits then, provided that the divorce occurred within two years.
Also, you are entitled to 100% of your ex-spouse’s benefits upon death, even if they remarried. However, these benefits expire if you remarry, and other conditions apply if you have earned your own benefits.
Since so much is at stake for your future finances, it’s imperative to work with a highly qualified Weston divorce attorney to protect your retirement accounts. An experienced lawyer will know what you need to do to keep a nest egg for the future, based on the unique details of your case.