Amicable Divorce: Asset Division with Retirement Accounts

Divorce doesn’t just split you from your spouse; it also divides up your money and assets. When a married couple agrees to a divorce, there are some financial steps to take, and knowing in general what to expect can leave you better prepared for the eventual negotiations.

After the initial shock of the divorce, many people aren’t sure how the division of their assets will play out in negotiations. The rule of thumb is that marital property is divided evenly between the two parties but there are a few exclusions and small things to remember. The first is the value of the asset plus any tax value (either present or future) that significantly affects the value. How you file your taxes before, during, and after a divorce can mutually benefit both parties. Depending on your assets, it may be beneficial to file jointly or separately. But keep in mind that if you file jointly, you could be at risk of penalties and fees if your ex-spouse does not pay his or her share.

Another tricky subject is retirement accounts, which are considered marital property. These are dealt with in different ways depending on other factors such as alimony and child support. A qualified Domestic Relations Order (QDRO) is issued by the court to determine how a retirement account is divided. If a spouse is receiving alimony or the similar, a partial retirement account can count in place of such alimony without the 10 percent early withdrawal fee.

Going through a divorce can be a stressful time that can be both mentally and financially draining. This stress can be multiplied many times if a party involved is worrying about the final state of their current assets and their future. An attorney experienced in property division and divorce can help create a legal plan of action that may be able to more-surely build a firm foundation for the future ahead.

Source:, “Divorce: Making Sense of the Confusion,” J. Kevin Stophel, June 2, 2014

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