Couples with higher overall assets often have to deal with more difficulty in the asset division process when compared with those who have fewer or less complex assets.
Complex assets could include investments or real estate holdings. They could also include retirement benefits and pensions, which may either be held by an employer or in a tax-sheltered account. Amounts accrued during a marriage are often subject to division in a divorce.
In either case, accessing and splitting those retirement funds usually isn’t a very straightforward process, which can make you worry about how divorce could impact your retirement savings. Thankfully, there is a solution available during your divorce proceedings that can protect you from financial losses related to your retirement account.
The courts can issue in order to split a retirement account or pension
It is common for individuals to incur fees and tax penalties if they withdraw from a retirement account too early. You may worry that attempting to divide your account as part of a divorce could diminish the total value of the account.
Thankfully, if the California family courts order the division of a retirement account or pension, that order typically allows the account holder to avoid any fees or penalties. A Qualified Domestic Relations Order (QDRO) issued in a divorce can instruct a retirement or pension plan administrator to split the accounts. When they do so in compliance with the order, neither the original account holder nor the spouse receiving a distribution from the account will have any fees or penalties.
Although you will still have to adjust to reduced overall retirement savings, you can at least avoid losses related to fees and tax penalties if you follow proper protocol with your QDRO.
If you’re going through a complex divorce, it’s important never to leave money on the table. Find out more about your legal options today.
