The time may be ripe for you to get a divorce. If so, it helps to realize that all marital property will be subject to division. This includes real estate, furniture, vehicles and stocks.
Retirement accounts of all varieties are also marital property. Pensions, IRAs and 401(k)s remain fair game. Knowing what happens with these monies prevents it from being a surprise.
Valuing retirement accounts
Before action becomes possible, one must figure out the value of all accounts in question. Many times, this is as simple as reading the most recent statements. Some financial instruments, such as pensions, provide fluctuating income, making valuation more difficult. Bringing in an impartial, independent appraiser is often a wise decision.
Splitting retirement accounts
The next step is fund distribution. Dividing the total into equal halves is always an option. Instead, the spouse that owns the retirement account might wish to offer other assets.
Perhaps this person has no other assets or does not wish to relinquish any. If so, both spouses must receive 50% of the account value. Proper division requires the establishment of a Qualified Domestic Relations Order. Most use the abbreviation QDRO when referencing them.
For a QDRO to be in place, it needs approval by both a court and a plan administrator. Payouts can occur in several ways. These include lump sums, installments or a transfer to another retirement account.
Divorce is a difficult situation for many reasons. One is that reaching financial equity might demand some tricky maneuvering. Before starting the divorce process, recognize that retirement accounts are not off-limits.