Dividing Retirement Assets in Your Divorce
Many people may overlook the value of divorce assets when dividing marital property because these assets are not easily liquid. However, these assets and benefits can be very valuable and can provide you with economic stability in your later years.
IRA Accounts
IRA accounts are among the easiest retirement accounts to divide and manage. These accounts are controlled by the spouse whose name is on them and can be transferred personally by that individual.
401K Accounts
401K accounts become slightly more complicated and must be divided by a Qualified Domestic Relations Order, otherwise known as a QDRO. The order allows the plan administrator to distribute funds from a plan member’s account to the alternate payee, in this case, an ex-spouse.
Other Accounts
Be sure to look for additional retirement assets, including supplemental executive retirement plans, excess benefit plans, stock options, restricted stock, deferred compensation plans, military pensions, and federal or state retirement plans. Each of these plans has its own rules for division, so it’s important to examine and divide them carefully.
Deferred Division Method Versus Present Value Buyout
The deferred division method will allow the retirement asset to stay intact and not get paid out to the parties until the person whose benefit it is retires. Often, this may be a good option if the party who benefits is retiring soon, or if they do not have liquid assets to compensate the other spouse for the reciprocal benefit. Present value buyout means that the spouse with the retirement asset will compensate the other spouse with assets of equal value for the spouse’s portion of the retirement benefit.
Community Property versus Separate Property
When dividing your retirement assets, it’s essential to consider whether any part of the assets or accounts qualify as your separate property. This can often lead to a more complex accounting of the account and its value growth. In general, any portion of the account that was earned before marriage and after separation can be considered your separate property.
It’s essential to note that, for certain retirement benefits, the community value of your account can increase after separation. Some of this increase may also be classified as community property. This is where a forensic accountant can be really helpful in sorting out these complicated details.
The Lawyers at Beresford Booth Are Worth Your Time
When choosing a lawyer, consider these factors and take the time to interview multiple candidates. Ask about their experience, fees, and approach to cases. Ask the best way to communicate with them. Trust your instincts and choose a lawyer who you feel both comfortable with and confident in.
Serving Washington Since 1946
Beresford Booth lawyers are experienced, dedicated professionals, prepared to answer your questions and guide you through the process based on your needs and goals. As a result of our experience, we provide you with practical advice and set reasonable expectations for the process. Together, we develop and implement a case strategy based on your goals. Beresford Booth is a Primerus law firm. Primerus is an international society of top-rated independent law firms.
Family law disputes can be stressful and emotional. Our family law group can take some of the weight off your shoulders. To request a consultation, please contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100.
