One of the many assets that Pennsylvania couples may have to divide during a divorce is their retirement money. These funds can represent the largest amount of cash the couple has.
If individuals do not take the appropriate steps when dividing retirement accounts, they could face high penalties and taxes as well as the realization that they may have given the other party more of their retirement money than necessary. To avoid such results, it is important that people remember that the different types of retirement account have their own rules that dictate how the accounts should be divided.
Work retirement plans require a qualified domestic relations order in order to be divided. Individuals who are entitled to a portion of their ex-spouse’s traditional pension plan or 401(k) plans will be unable to have legal access to the funds unless they complete and file the order with the court.
However, before the order is given to the court, it should undergo a comprehensive review by an attorney to ensure that its contents are in line with what is stipulated in the divorce decree. The order should specify if the 401(k) funds are to be distributed to the recipient directly or if they are to be transferred to a rollover IRA. A separate document should be completed for each retirement account that has to be divided. After the order is filed, the administrator of the 401(k) will have to provide its approval before the money is moved.
A divorce attorney may use negotiation to help clients obtain the resources they need to have a stable financial situation after a divorce. If necessary, the attorney may engage in litigation to obtain favorable property division terms regarding assets like retirement accounts, real estate, offshore accounts and other types of high-value assets.