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Divorce and retirement accounts

In recent years, there has been a shift in the age at which many individuals choose to marry. In New York City, many career-driven residents tend to marry later in life. These individuals typically bring more personal assets and wealth to a marriage. In cases where a couple subsequently decides to divorce, the division of assets can be complex and contentious.

For many individuals of considerable wealth, investment and retirement accounts are among some of the most valuable and well-funded personal assets. It's no surprise then that the division of assets related to retirement accounts and pension plans has become a major issue for many divorcing couples.

While previously divorce among married couples over the age of 50 was rare, today roughly a quarter of all divorces involve couples over the age of 50. For these couples in particular, it's important to ensure retirement assets are accounted for in a divorce settlement.

Assets earned during a marriage are all considered joint marital property. As such, any monies contributed to or matched in an individual's 401K or pension plan are subject to specific state laws related to the division of marital assets. It's important, however, that individuals obtain a Qualified Domestic Relations Order to ensure assets held in retirement accounts are properly distributed.

In most cases, a divorcing spouse's share of retirement account assets are typically distributed via a QDRO directly into an IRA account. In cases where an individual plans to use a portion of these assets for related fees, it's important to investigate how the account will be funded.

New York residents who plan to divorce and have questions related to personal assets and retirement accounts would be wise to consult with a divorce attorney. A legal professional who has experience handling complex financial matters related to divorce can answer questions and provide legal advice.

Source: PhillyBurbs.com, "Your Assets in a Divorce," Loretta Hutchinson, July 22, 2013

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