How Do You Divide Retirement Assets in a Divorce?

Next to your home, your retirement plan is probably the largest asset that you own. Often, one spouse has accumulated considerably more in their retirement plan than the other. This is particularly true in families where one parent has taken time away from work to raise their children. Just because the retirement asset is all or mostly all in one person’s name does not mean that they get to keep it. According to Forbes, almost all retirement assets can be divided in a divorce

In general, retirement assets fall into two broad categories. There is those that will be divided by language in your judgment of divorce and those that need a Qualified Domestic Relations Order. If either spouse has an IRA or a Roth IRA, it will be divided by language in your judgment of divorce. As a practical matter, it is a good idea to call the custodian of the IRA or the mutual fund family where your IRA is held. Ask them what specific documents they will need or the language they would like to see in the decree to make this transfer occur. This will avoid any unnecessary surprises and the transfer will occur easily. 

If the retirement plan is connected with employment such as a 401K or a pension, you will need to go one step further and obtain a Qualified Domestic Relations Order. This is simply a legal document signed by the judge. The Qualified Domestic Relations Order provides a set of instructions to the administrator of the retirement plan. Start this process early because it can take a while to gather all of the information that you need. 

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