Protect Your Retirement During Divorce
State pensions, military pensions, 401(k)s, Roth IRAs and other retirement accounts are valuable assets. You work hard to put funds into them, and it takes time for those funds to grow. When you retire, they are certainly important. When you divorce, they are subject to division under Alabama law.
At Joseph Allan Shaw, P.C., we make sure your retirement accounts are given due consideration during property division. We will advise you on the rules regarding division, the consequences of a decision and the best way to protect the value of your accounts.
What Are Some Of The Rules Regarding Retirement Funds?
There are a few rules that everyone should know about dividing retirement accounts as they consider divorce. Keep in mind that these are general descriptions and should not be construed as legal advice, that is something you need to reserve for your lawyer based on your unique circumstances.
- Separate versus marital interest: Only the portion acquired during the marriage is subject to division. Any funds and interest acquired prior to the marriage are considered separate property.
- Actual versus constructive division: Retirement accounts are subject to division, but it does not mean that you must withdraw money now or direct a portion of the benefits to your ex-spouse during retirement. You can choose to divide the value of the account, supplementing your spouse’s martial portion with another asset of equal value in the property agreement.
- All accounts are not created the same: When determining how to divide retirement accounts, you must consider more than the balance of the funds. You must consider all aspects such as tax consequences. A Roth IRA and a traditional 401k may have the same balance of $100,000, but the 401k is generally considered taxable income whereas the Roth IRA is not.
Mistakes Are Costly. Let Us Help You Avoid Making Them.
Do not make divorce decisions involving important assets without the guidance of an experienced lawyer. Mistakes related to retirement accounts are costly, and you may not notice the damage until it is too late to fix.