There are a plethora of issues to address when a California couple or those living elsewhere decide to get a divorce. When a couple is younger, the discussions often turn initially to child custody or support. However, as years pass, the focus tends to shift to the issue of property division. In fact, if a couple is over the age of 50, there are several factors to consider related to retirement accounts and divorce.
Those going through a so-called “gray divorce” often have to determine how years of intermingled finances will be split. They also must follow very stringent guidelines established by the IRS when it comes to dividing retirement accounts, particularly 401(k) plans. A QDRO, or qualified domestic relations order, decrees that a spouse getting a divorce may receive assets from the other spouse’s qualified plan. In addition to IRS rules, every individual employer has its own criteria about how to divide pension assets.
However, any assets from an IRA must be divided pursuant to a divorce decree, and do not require a QDRO. If cash is removed from an IRA, it may be subject to taxes or penalties for early withdrawal. Of course, penalties or taxes will not be incurred if the money is rolled directly into another IRA.
Going through a divorce can be a complex process. A California divorce lawyer can be a strong ally throughout every phase of the proceedings, whether it be dealing with property division questions or one of the other myriad issues. An experienced attorney will act in a client’s best interest to ensure that both current and future needs are met in a divorce.