Saving enough money for retirement is difficult enough without any unsuspected issues coming to light. If you decide to divorce, you can expect your retirement plans to change in some ways.
Your biggest concern will be your ability to retain enough money to keep the same retirement plan in place. This is why it's imperative to understand how to divide retirement assets in divorce, while protecting your rights at every turn.
Here are some important points of consideration:
- Keep your own accounts: If you and your soon-to-be ex-spouse have nearly equal retirement savings, you may agree to keep your own account and leave well enough alone. Even if you're doing so, don't lose sight of other retirement assets you may have a right to, such as pensions.
- Consider a transfer: If one spouse has more retirement savings than another, part of one person's account can be transferred to the other. This is completed with the help of a qualified domestic relations order (QDRO).
- Negotiate with the type of account in mind: As you negotiate with the other party, such as in mediation, remember that not all retirement accounts are the same. For instance, the tax implications of a Roth IRA and 401(k) are entirely different. It's critical to focus on more than the value of the account. You must also know how it will affect you in the future.
- Protect yourself: Depending on the circumstances of your divorce, you may assume that an informal agreement is okay. Instead of going down this path, make sure everything is in writing. You should never assume that your ex will live up to a verbal agreement in the future.
There's a lot to think about in regard to property division, with retirement accounts at the top of the list. Fighting for your rights during your divorce will benefit you in the long run, especially when it comes time to quit the workforce for good.
If you're faced with divorce and have questions or concerns about dividing retirement assets, take a step back to assess your situation and set reasonable goals. When you combine this with knowledge of your legal rights in Illinois, you'll feel more confident in the decisions you make.
Review our website and read our blog for more information on property division, debt division and related family law subjects.