You can never predict when a marriage might end. It can happen after a
year, after 50, or hopefully, it may never happen! When you enter into
a marriage, you go into it with the expectation of sharing your life with
your spouse. You two build your life together, which include retirement
and pension plans. However, what happens when you decide to divorce?
The attorneys at James D. Madden & Aruna P. Rodrigo, Family Law Attorneys can help when it comes
time to divide retirement accounts. The most important things to note
is what account you and your ex will be splitting. In most cases, common
plans couples share include:
- Pension plans
- Tax-sheltered annuities
- Individual retirement account (IRA)
In California, retirement plans are generally divided equally between the
two parties. For IRAs, couples would usually file for a transfer incident.
Transfer incidents allow the parties to pay tax on specifically the assets
they have gained. If a couple does not distinguish their division as a
transfer incident, one party might end up paying taxes on all the goods
and have to also pay an early withdrawal fee. Essentially, the designated
amount rolls over to the other spouse.
For other retirement plans, including 401(k)s, a couple must file Qualified
Domestic Relations Orders (QDROs). Because California is a “community
estate,” property and assets gained during marriage is split equally
between the spouses. This includes retirement plans. A QRDO is a type
of court order that determines how the retirement benefits are divided.
QDROs are prepared in addition to marital settlement agreements or the
final judgement on the divorce. In order to successfully divide the retirement
benefits, it is important that the QDRO include all assets and privileges
granted in the retirement plan. In order to successfully divvy up the
accounts, it would be prudent to hire a professional who is well versed
in family law.
At James D. Madden & Aruna P. Rodrigo, Family Law Attorneys, our certified family law specialist
is ready to help you. If you and your spouse are going through a divorce,
contact our San Bernardino divorce attorneys. We can help review your
case and make sure that your retirement accounts are divided fairly and properly.