The Ins and Outs of Retirement and What You Need To Know

Posted by on 08.30.2018 in Posts | Comments Off on The Ins and Outs of Retirement and What You Need To Know

The Ins and Outs of Retirement and What You Need To Know

By Carolyn Mirabile, Partner

Retirement assets are often the main focus of a divorce. In fact, a client will usually come in and say, “I don’t care what I have to give to my spouse, but I want to keep my retirement.”

Understanding the complexities relating to a retirement account is important in reaching a final resolution in your divorce. Clients often come in not knowing they have retirement accounts or the value of their retirement account. Without valuable information, client’s often make costly mistakes relating to their retirement accounts.

Participants in a deferred compensation plan, such as a 401(k), will often accumulate pretax dollars into a retirement account. While participants in a defined benefit plan, such as a pension, have a retirement benefit based on a formula. Both types of retirement assets are usually divided pursuant to a Court Order but there are some exceptions. If the retirement asset can be divided by a Court Order, this will allow monies to be transferred to the other spouse tax free, without early withdrawal penalties. If the retirement asset cannot be divided by a Court Order, the parties may have to be a little more creative in making sure the nonemployee spouse obtains the retirement benefit post-divorce.  Additionally, the parties often have to calculate the marital component of a retirement asset before it is divided between the parties.

Retirement assets can be complicated. The Weber Gallagher Family Law department can help you discuss the particulars of your retirement account and the benefits of how it should be divided.