How much do you know about divorce? It can be pretty complicated, and it can get even more complex if you have a lot of assets to deal with. But did you know that your retirement assets are probably the largest liquid assets that you have to your name? Did you also know that it takes a special touch to split these assets during divorce?
What to Look Out for When Splitting My Retirement Assets
Taxes and Penalties– Many retirement accounts are tax-differed, which means you don’t have to pay taxes until you withdraw from these accounts after retirement. This lets you accrue interest on that portion of your savings that would have been taken by taxes. This is an awesome way to save, but it can be tricky when it comes to divorce. If you withdraw portions of these tax-differed accounts while splitting them in a divorce, you could wind up paying both penalties and taxes.
QDRO– For some of these tax-differed accounts, a qualified domestic relations order (QDRO) will be required to split the retirement account. A QDRO, if filled out properly, can be a tax-free solution when it comes to splitting retirement assets, but be warned. You must make sure you submit the form properly to the court and to your IRA’s custodian, otherwise the transfer could become subject to an investigation.
Who Will Benefit– By the way, some retirement policies require that you list beneficiaries on your account just in case something happens to you. These beneficiaries trump any divorce court order that says an account was transferred from one spouse to another. So, be sure to change your beneficiary listings on your retirement accounts.
Divorce is complicated, but with the help of a good Houston high-assets divorce attorney, you can keep from being overwhelmed. Find more tips on handling divorce by following our blog. And don’t forget to stop by our Twitter and Facebook pages for even more divorce knowledge you need to know, or call John K. Grubb, Houston, attorney, at 713-877-8800 and schedule an initial consultation..