Georgia and South Carolina couples know that divorce is messy at any age. However, divorces that involve retirement accounts can often be messier just by the nature of the accounts.
Retirement accounts are usually set up to support the person and their spouse later in life. As a result, a retirement account that has been nurtured over the years will likely have a generous amount in it.
How are retirement accounts split?
There are different regulations to splitting retirement accounts based on the type of account it is. For example, 401(k) accounts are a common type of retirement asset, but they’re not as easy to transfer in the event of a divorce.
In order to transfer or split retirement accounts like 401(k)s or pensions, you would need a qualified domestic relations order or QDRO. You would file for a QDRO so that the account can be split according to what’s decided in court.
Typically, 401(k)s are easier to transfer than an IRA or pension plan. This is because 401(k)s usually have a set amount in there that the account owner knows about whereas IRA or pension plans may fluctuate based on the terms and conditions of the account or the employer.
How do you determine the amount?
The amount of the retirement account that will be split is determined by several varied factors. For one, if you and your spouse were actively using the retirement funds to live on, a court of law is much more likely to split the retirement account evenly.
There are other factors that go into deciding when and how to split a retirement account. This can include but isn’t limited to:
– Whether a retirement account exists for the other spouse
– What other assets the spouse is asking for
– The financial impact of splitting the retirement account
Often, splitting retirement accounts can be a complicated process that costs a considerable amount in fees. It’s important to weigh the long-term impacts of splitting a retirement account before making any decisions as to how the asset will be split.