Can Divorce Affect Your Retirement Accounts?

During a divorce, it’s common for spouses to divide their assets and debts among each other fairly. This sounds like it should result in equal distribution and no difficulties, but problems often arise when one spouse believes they are entitled to their other spouse’s assets or benefits. Such is the case with various kinds of retirement benefits. A Stockton, CA divorce attorney from McKinley, Conger, Jolley & Galarneau, LLP can help with dividing assets and debts and other types of disputes.

Attorneys Dennis Shore, John H. McKinley, John Richard Conger Jr., Brett S. Jolley, and their entire team would like to consider some of the basics when it comes to retirement benefits during a divorce. This should give you a good idea of what to expect.

Retirement Benefits Potentially Impacted by Divorce

When it comes to retirement benefits that are potentially in play during a divorce, this covers benefits from your personal employment as well as government benefits due to you during retirement. This includes:

• Social security retirement benefits
• 401(k)
• Pensions
• IRAs

Below is a broad overview of how these retirement plans may be divided.

Social Security Retirement Benefits

If a marriage has lasted at least 10 years, a spouse may be entitled to a share of their former spouse’s social security retirement benefits following a divorce. To qualify, strict criteria must be met. In addition to the length of the marriage, these requirements include:

• The individual is currently unmarried
• The individual must be 62 years old or older
• The individual would earn less in their own social security benefits than they would earn from their former spouse’s social security retirement benefits

Qualified Domestic Relations Order (QDRO)

When dividing a qualified retirement plan such as a 401(k) or pension, a qualified domestic relations order (QDRO) is required.

A QDRO allows a specified amount of funds from a qualified retirement plan to be directly given to a former spouse. These funds will be subject to taxable distribution. The funds may also be rolled over into a traditional IRA, which may or may not be advantageous to the former spouse depending on age and current financial needs.

Transfer Incident to Divorce

When transferring retirement funds from IRAs, certain paperwork must be filed before these retirement funds can be transferred to a former spouse. This is when a transfer incident is required.

A transfer incident allows IRA funds to be transferred to an individual’s former spouse. The transfer incident allows the transfer of funds on a tax-free basis. Additionally, the transfer incident can also avoid fees and other penalties when the funds are transferred.

How Our Divorce Lawyers Can Help

Given the amounts of money involved and the realities of retirement, it’s only natural that people would be protective of their social security benefits, 401(k), pensions, and IRAs. The paperwork and legal disputes regarding these retirement funds can be complicated and exhausting, compounded by the other complexities of the divorce and harsh feelings and resentments that may be in play.

By working with a skilled divorce attorney, you will have an advocate on your side who will aim for fairness and give you an idea of how to safeguard your future. When disputes become heated, we will serve as objective parties to help steer mediation and discussions in a more constructive direction.

Contact McKinley, Conger, Jolley & Galarneau, LLP

To learn more about the division of assets and debts during a divorce and other matters you should be aware of when it comes to the end of a marriage, be sure to contact our team of divorce lawyers and family law attorneys. The lawyers of McKinley, Conger, Jolley & Galarneau, LLP are here to help you. You can reach our Stockton and Central Valley offices by phone at 209-477-8171.