An increasing number of people over the age of 50 are deciding to divorce and because of this, many married individuals in Columbus, Ohio, are worried about their retirement plans. A High Asset divorce often includes retirement funds, investment accounts, real property, motor vehicles and many other assets. As one’s age increases, however, many people begin looking to the future in order to prepare for it. This is when divorce can be its most destructive.
Careful consideration needs to go into the divorce settlement if a person does not want to see his or her retirement funds severely affected. Perhaps one of the most important decisions focuses on the marital home. Many divorces result in a couple fighting over this property, even though its value is not certain. Consider the tax implications of owning a home, as well as the potential for appreciation. Be sure to realize that any sacrifices you make in your retirement plan to receive the home could be a mistake. A home is not often a good source of retirement contributions.
Another important part of the relationship between retirement funds and divorce is the qualified domestic relations order. A QDRO is necessary if divorcing spouses want to transfer a portion of the accounts from one spouse to another without paying the 10-percent penalty for withdrawing before turning 59 1/2 years old. Divorce provides a one-time shot to remove funds from accounts like a 401(k) or 403(b) without paying a penalty. Experts suggest divorcing individuals use this opportunity wisely.
Dissolving a marriage does not have to be severely detrimental to a person’s retirement fund. An experienced divorce lawyer can be extremely helpful in this and other circumstances. By speaking with an attorney about your situation and your specific concerns, you may be able to find a way to reach a settlement that does not leave you destitute in your later years.
Source: New York Daily News, “Money Pros: Don’t let divorce rip apart your retirement nest egg” Marilyn Timbers, Aug. 14, 2013