Dividing retirement accounts in divorce: Avoid pitfalls!!
Many couples in North Carolina try to handle their own divorces without legal help. While couples are able to get divorced on their own, they should be careful when they have retirement accounts and pensions that need to be divided.
Making mistakes when dividing retirement accounts and pensions can be very costly for people who are divorcing. If they simply withdraw the amounts that should go to their spouses, the people may face huge tax bills and early withdrawal penalties in the thousands of dollars. When retirement accounts are divided in divorces, many require that the people use specific orders called qualified domestic relations orders in order to divide them.
With properly prepared QDROs, retirement funds and pensions can be transferred to the other spouses’ own accounts free of taxes and without early withdrawal penalties. People may save substantial sums by finding professionals who understand how to complete these forms and to submit them. People should not get divorced before they have the QDROs in place. If they do, the spouses who would otherwise have been entitled to receive funds may be left without anything.
People who are planning to divorce and who have accumulated significant assets during their marriages may have complex property division issues that they will need to resolve. High-asset divorce cases may require people to properly divide pensions, retirement accounts, stock holdings, art collections, real property and more. Experienced family law attorneys may be able to assist their clients with complex property division issues so that they avoid tax consequences and receive the amounts to which they should be entitled. The lawyers may advise their clients about whether or not they should accept property division agreements or if other types of divisions might be more appropriate. In many cases, the lawyers may be able to help negotiate full agreements without litigation.
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