09 Jan What To Know About Retirement Accounts and Divorce
When going through a divorce, one of the most significant concerns for couples is the division of assets. Retirement accounts are key financial assets that may be impacted during a divorce. Here is what you need to know about retirement accounts and divorce for residents of Washington State. We will go over the types of retirement accounts subject to division, how they can be divided, and the importance of seeking the help of an attorney.
Types of Retirement Accounts Subject to Division
Washington State is a community property state, which means most assets acquired during a marriage are considered property of both spouses and are subject to division upon divorce. This includes various types of retirement accounts:
- 401(k) plans
- Pensions
- IRAs (Individual Retirement Accounts)
- Deferred compensation plans
- Annuities and other retirement savings
However, there are some exceptions. For instance, if a prenuptial agreement was in place or if certain assets were separate property before the marriage, then they would not be subject to division upon divorce.
Dividing Retirement Accounts
There are different methods for dividing retirement accounts in a divorce, and courts may consider several factors, such as the length of the marriage, the age of the spouses, their needs and financial resources, and contributions each spouse made during the marriage.
Here are some common methods for dividing retirement accounts in a divorce:
Equal Division
Both spouses receive an equal share of the retirement account. This may involve splitting the account into two separate accounts or determining the present-day value of the account and dividing it accordingly.
Qualified Domestic Relations Order (QDRO)
This is a court order for a retirement plan to pay benefits to a divorced spouse. QDROs are most often used with 401(k) plans or pension plans and are required for dividing a retirement account without triggering taxes or early withdrawal penalties.
Offsetting Assets
Instead of dividing the retirement account, one spouse may keep the entire account if they agree to give the other spouse an asset of equal value, like a home.
The Importance of a Property Division Attorney
Dividing retirement accounts during a divorce can be complex, and mistakes can lead to negative consequences, such as tax penalties or a reduced share of the assets. Working with an experienced property division attorney can help separating couples navigate these complexities and ensure a fair outcome.
A skilled property division attorney will help you understand your options, negotiate with your spouse’s legal team, and safeguard your financial future. They can also determine the present-day value of the account and its tax implications and guide you in obtaining a QDRO when necessary.
Understanding retirement accounts and how a divorce impacts them is crucial for protecting your financial future. Remember these things to know about retirement accounts and divorce, and seek the assistance of a knowledgeable property division attorney to receive your fair share of assets.
If you are looking for a well-rounded attorney who is passionate about helping their clients, consider LaCoste Family Law! Give us a call so we can start working on your case today.