Question about divorce and retirement accounts?

Question

I am getting a divorce and have a question about my retirement accounts. I am having to split my retirement in half. I thought that is the only amount of money that gets split. Who gets the interest that is gained from the money after the split of the account. Me or her. I am confused about this. Lawyers just want to seem to get everything signed and not explain things in plain English. They have so much jibberish in the language it is amazing anyone no whats they are getting. Also I no longer work with the company I have my retirement account. Can i change it over to an Ira after the divorce so I can build my account back up. Otherwise it seems like all my retirement plans are down the drain with this also. This does not seem fair to me.

Answer 1

Typically, you must get a QDRO (Qualified Domestic Relations Order) to split your account.

What this will do is give her her portion, and your account will be yours and yours only.

She can keep a seperate account with this same brokerage, or transfer this money to another account of her choosing without adversely impacting your account or tax situation. (I.E. if she took a distribution, you would not be liable for taxes and penalties.)

One thing to consider is that she is typically only due monies earned during the marriage. So, if you had money in your IRA or 401(k) accounts prior to marriage, that money should be removed from the pre-split amount.

Only marital funds are subject to being split. Anything earned prior to the marriage is NOT marital property.

So, I would look very closely at this, and make sure you are not leaving too much on the table.

I would want to see the QDRO as well.

In my divorce, I had a 401(k) from a previous employer, and rather than splitting all of my accounts, I was able to simply have one QDRO to transfer this entire account to my ex-wife.

It saved me the hassle of moving the money to my own IRA, and reduced the chance for error by involving several accounts.

So, you may want to look at a proposal that gives your STBX the same amount of money, but touches fewer accounts, by liquidating the account with the previous employer first.

Food for thought?

Answer 2

Been there, so, hopefully this will help:

I'm assuming that you and she were married for a long time, and that she has no account (IRA) of her own. It is on this basis that the question will be answered.

The law believes that though a wife did not work,and therefore contribute monetarily to your estate, that by her keeping house, yadayada, she contributed 50% to the estate. At divorce, unless you two agree on something else (note below) she is entitled to 50% of the assets amassed during your marriage(In some states even more). Unless you agree otherwise, 50% of your IRA or your retirement accounts are almost automatically hers. (I am assuming you are not vastly wealthy). After the settlement, your tax protected $$ can remain tax protected in a new IRA account -- you simply roll it over..... Any brokerage house can help you with this. If it was a Roth IRA, then you have already paid taxes on it. Each state, as does the Fed. Gov. has rules on how much you can put into an IRA as protected money, by playing yearly "catch-up". After the account is split, each account has its own separate investment number, and therefore each earns interest contributed to that account. The original account is closed..... The feds still want their money, at the same time, they are trying to save your estate so you won't be on welfare in your final years -- it's a double-edged sword.This should answer your questions. But you will in any even need to consult a rather good CPA to set this up for both of you..... Now for some notes..

It is always cheaper if you both use the same attorney, and have him fill out your papers. In an adverserial position -- your attorney against hers -- the only ones who get rich are the attorneys....at your expense However, you both must agree on the terms of your settlement. It is called using a "Mediating attorney"... look in the phone book . As a scenerio: For example, if she is not seeking alimony, she may feel she should have part of your retirement accounts.... If you have real-estate, she may prefer the $$ from the sale of it as opposed to your accounts...(Incidently, if this was a relationship over 10 years, that did not include a marriage certificate, she would still be entitled to 50% by common law in most states of the assets you amassed during your relationship.) In some states it even goes back to 50% of everything you ever earned, even before you met her.... a real problem with wealthy people with no pre-nup. in community property states.
Helpful?

The absolutely cheapest way to do this is to get internet divorce papers, fill them out yourselves and submit them. If you owned little and had little in the way of an estate, this would cost somewhere in the area of $15. to file.

Answer 3

Most property that is acquired during marriage is considered marital or community property.Your retirement plan is also marital property. What ever is in account including the interest to the day of divorce will be split between two of you as per court divorce decree. You can do with the part of retirement what you do IRa make sense if you are contributing to it.

Answer 4

If he out it in an IRA (Individual Retirement Account) then it's his..but if it's in a joint account than you both have rights to it...ask for a statement from the company for better understanding.

Answer 5

if you close the existing account after you split the money and then open a new one, after the divorce,you do.