Couples in Connecticut who are getting a divorce might need to consider how they are going to split up their retirement assets. Sometimes when people are going through divorces, they want to go ahead and get them over with so they can put their emotional baggage behind them and move on with their lives. However, in their rush to end things, they might put off addressing important issues that could come back to haunt them later on.
One of the major issues that people have to deal with then dividing up their retirement assets in a divorce is whether their division will be taxed. Generally, if it is specified how the assets are divided up in the divorce decree, the division is not taxed. However, it must be denoted appropriately within the divorce documents in order for couples to avoid taxation. According to a CPA and CFA professional who specializes in divorce issues, the best way for couples in a high asset divorce to transfer assets from one IRA to another is via a direct transfer. Couples can also choose to get qualified domestic relations orders to ensure that their retirement accounts are divided appropriate based upon who gets what percentage of the account.
Couples might also want to consider making sure that their beneficiary designations are updated on their accounts after they get divorced. Some states automatically remove ex-spouses as the beneficiaries on retirement accounts after divorces, but people should not count on this. They should ensure that they are updated themselves if they want their wishes to be carried out.
Family law attorneys might be able to help couples going through a divorce divide up all their property, including their retirement accounts. They might also assist them with negotiations concerning issues such as child support and alimony too.
Source: FOX Business, “How to Split up Retirement Assets in a Divorce“, Marilyn Bowden, September 16, 2013