Top Divorce Mistakes That Can Cost You; Dividing Your Retirement Accounts
JACKSON, Mississippi. If you are going through a divorce, one of the challenging questions that you and your ex will need to navigate involves dividing assets, and this includes your shared retirement accounts, if you have them. For many couples, retirement accounts are a major factor in their net worth.
If you have an IRA or other retirement plan, the rules for dividing your IRA can be more complex. These accounts are not like regular bank accounts where you can just withdraw the money and give some to your ex. Withdrawing money from these accounts can have serious and costly tax implications. It is important to follow the law precisely when splitting these accounts.
According to Investopedia, if you are getting divorced, your IRA can be divided using a process known as a “transfer incident to divorce.” If you have a 401(k) or 403(b), you’ll need to split these accounts under a “Qualified Domestic Relations Order.” It is important to have this order in place before you get divorced and it is also important to note that a divorce agreement stipulating the split of your retirement funds won’t be sufficient to enforce a split of the funds without this order in place. Furthermore, it is important to remember that when the assets are transferred, they must be put into a retirement account, either an IRA, 401(k), or 403(b). If the recipient takes the money and puts it in a savings account or checking account, he or she could be responsible for paying heavy penalty fees. If you own the IRA or retirement account and fail to label the withdrawal properly, you could also face a high penalty fee. Because the penalties can be quite high, it is important to perform the transfer to the letter of the law. If you have questions about how to divide retirement accounts, consider speaking to Sorrentino Law, a divorce lawyer in Jackson, Mississippi today.
According to Time Magazine, you should also consider changing your beneficiaries on listed accounts. When getting divorced, it is important to update beneficiaries to ensure that your money goes to your children or the correct beneficiary should you pass away.
It is important to find the right lawyer who can help you navigate the process of dividing your retirement accounts. The laws can be complex and a mistake can be costly. Failure to properly label a transfer can result in both parties facing penalty charges. This can complicate a divorce settlement agreement, especially if money is lost.
Another complication can occur if both or one of you entered the marriage with money already in your retirement accounts. Individuals may require the services of a forensic accountant to determine what money belongs to the marriage and what money belonged to the individual prior to it.
If you are planning to get divorced, the complexities of dividing assets can add to the stress of an already highly stressful situation. Fortunately, you don’t have to navigate these challenges alone. Sorrentino Law are divorce lawyers in Jackson, Mississippi who work closely with individuals who are getting divorced. We can help you split your assets in a fair manner under the law.
106 S. Presidents St. Suite 310
Jackson, MS 39201
Telephone: (601) 695-7765