Protecting Your Retirement Assets In Divorce

For many people, their retirement funds represent the single largest asset, perhaps exceeded only by the equity in their homes. A portion of your retirement accounts and those of your spouse may be community assets. This means that they are subject to division in divorce. The future stream of income coming from a defined benefit pension plan is also subject to division.

As a person making plans to divorce, you may have many questions about what your financial future holds, such as:

  • How can you protect your retirement funds in divorce?
  • Will you get your fair share of your retirement funds?
  • What are the tax implications of dividing taxable investment accounts?

At Watkins & Letofsky, LLP, we have answers to these and other questions about protecting your retirement in divorce. Call us at 866-439-1295 to schedule a free consultation.

Dividing Retirement Assets In Divorce

When we represent you, we will collect information on all of your financial accounts to determine how to best protect your retirement funds, including:

401(k), 457, 403(b), IRA and Roth IRA accounts — In some cases, it may make sense to divide the community portion of these accounts through a qualified domestic relations order (QDRO). Upon receipt of the QDRO, the account administrators will create a new account for each spouse and transfer funds to the accounts on a tax-free basis. It may be possible for one spouse to retain these accounts, by the transfer of separate funds to the other spouse. This can avoid the need for a QDRO.

Taxable investment accounts — The community portion of these accounts must be divided. However, if some of the investments must be liquidated, there can be tax issues to consider if the accounts have significant unrealized capital gains tax liabilities.

Defined benefit pension plans — The funds deriving from a defined benefit pension plan may be community property, either in whole or in part. There are two basic ways to divide these benefits — as a stream of monthly payments upon retirement or in a lump-sum payment (from the separate assets of the beneficiary) at the time of the divorce. We can help you make the decision that is right for you.

Are You Approaching Retirement?

If you are over 50 and are divorcing, your retirement assets are a special concern. You will have fewer years to save for your retirement, so it is important that you receive your fair share of your 401(k) accounts, IRA accounts, taxable investment accounts and pension benefits.

At Watkins & Letofsky, LLP, our attorneys are committed to helping each client obtain his or her fair share of retirement assets. You can depend on us to protect your rights and interests throughout the divorce process.

Free Consultation With A Lawyer

Call Watkins & Letofsky, LLP, at 866-439-1295 or online to schedule a consultation. We have offices in Santa Ana, California, and Las Vegas, Nevada, to serve you.