Tips for Splitting Retirement Assets in PA

It is important to take retirement assets into consideration during the property division determination portion of the divorce proceeding.

The asset division determination portion of a divorce proceeding can be difficult and contentious. Couples must review assets and classify all as either separate or marital. Assets classified as separate are owned by one spouse and generally include those that were owned prior to the marriage and not commingled with marital property during the marriage. Marital property generally refers to the assets accumulated during the marriage.

It is beneficial to consider the importance of retirement assets when making this determination. Retirement assets can be difficult to value and split, particularly since these assets often do not pay out until later in life. However, it can be difficult to replenish these accounts. As a result, it is often wise to include at least a portion of retirement assets in the final determination.

Tips to successfully splitting retirement assets

In some cases, it is wise to get a financial specialist to assist in valuing retirement assets. This process often includes a complex calculation that reviews the owning spouse's income, employer contribution and life expectancy. Once this value is determined, the odds of a fair split increase.

When making this split, there are a number of considerations to take into account. Arguably, two of the top factors to consider are the QDRO and beneficiary designations.

More on the QDRO

The QDRO, or Qualified Domestic Relations Order, is a court order that provides instructions on how retirement assets are to be split. In many cases, a final divorce decree providing these instructions is not enough. This is particularly true with 401(k)s, pensions and profit sharing plans.

More on beneficiary designations

Beneficiary designations are used on a variety of accounts. Some examples can include savings accounts, brokerage accounts and life insurance policies. The term refers to the person or legal entity that is assigned to benefit from these accounts when the owner is no longer present.

In many cases, the beneficiary designation on an account supersedes instructions in a will or estate plan. As a result, it is important to review and update these accounts following a divorce. This will help to better ensure an unintended beneficiary does not receive these assets.

Legal counsel can help

A QDRO must be carefully drafted. The language can be complex and a misstep could lead to a document that does not provide the anticipated benefits. QDROs and beneficiary designations are just two of the many issues that can arise when splitting retirement assets. Those going through this process are wise to seek the counsel of an experienced property division attorney to better ensure a more favorable outcome.

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