During a divorce, you and your spouse will want to divide all of your possessions in a fair and satisfactory way. A divorce attorney can help you to enforce fairness when making the division. You also will want to consider how various tax implications will affect divisions, especially the divisions of QDROs, retirement accounts and more.
You will want to be fully aware of what you own and make sure to account for all checking, savings, retirement and brokerage accounts during property division. You will also want to look at all insurance policies and employment benefits.
Before dividing any retirement accounts, you will want to make sure that you are doing the division in a way that will not result in taxation or penalties. Court-approved divorce decrees or legal separation agreements will indicate how the accounts should be divided. Oftentimes the financial institution that holds a retirement account will require a document with reference to the account number and the custodian or trustee in order to make the transaction.
With some accounts, timing is crucial. If assets are transferred before a divorce decree is approved by a judge, the transfer may be noted as taxable distribution and be subject to a 10% penalty. Therefore, it is essential to wait until after the divorce is final to make any decisions about transferring these assets. Retirement plans can't be divided unless the divorce has a Qualified Domestic Relations Order.
This is a court-issued order that will allow a spouse to take funds out of a retirement account without receiving tax penalties. If you want more information about IRAs, QDROs, and other investment accounts, talk with a skilled divorce attorney in San Fernando. At Cutter & Lax, we strive to provide informative and helpful service to individuals all throughout the U.S.
