For many divorcing couples in Minnesota, retirement assets represent the most valuable assets owned by the parties. In other words, most of the parties’ money is located in retirement accounts. Despite this fact, many couples do not take the time to understand the implications of dividing these accounts.
One thing that is important to keep in mind is your age and your desired retirement age. If you deplete your retirement funds in order to keep another asset (for example, a home) or to reduce the amount of cash you owe your spouse, it is important to be aware of how many working years you have left in order to replenish those funds.
It is also important to include language in your Decree relative to how these funds will be divided. Many retirement assets (although not all) require a separate Order to divide the account. The most common Order is called a Qualified Domestic Relations Order (QDRO). Before this document is submitted to the Court, you and your attorney should review it very carefully to ensure that it reflects the agreement reached in your Decree. The plan administrator will then review the document, approve it, and then the transfer of funds will take place.
You should also do your research before dividing any retirement asset in order to avoid incurring any taxes or penalties. For example, if you decide to simply withdraw funds from a retirement account and give them to your spouse without transferring them to a qualified retirement plan, you will incur a tax penalty for withdrawing those funds.
If you have any questions about how your retirement assets may be divided in a divorce proceeding, please call me today at 651-647-0087 or reach out via our online contact form to set up your free consultation.