There are many emotional and practical issues which are to be addressed by the couple getting divorced. The retirement accounts are usually divided among the couple after getting divorce. Most of the times the couple comes up with their own terms of agreement regarding the splitting of the individual retirement accounts.
Divorce results in a legal dissolution to marriage. When a couple has decided to get divorced, then it results in settlements of many other aspects such as property which is to be divided equally among the couple. It includes the retirement assets also. The distribution of assets is dependent on factors such as the requirements of the spouse and the contribution of each spouse in the marital property.
The retirement assets before the marriage will be given to the spouse who has earned it. The retirement assets which are either earned or acquired after the marriage would be considered as community property.
The rules also are different for the different types of pension plans. They are usually divided as per the judgment of the court or the court order among the couple. The division of assets also depends on rules of your region. Hence, it is necessary to be well informed about the divorce laws of your particular region and about the distribution laws of retirement assets after divorce.
You can collect this information by referring to various websites and books for information about these laws. You can consult your attorney for the right divorce advice to get a fair distribution of individual retirement accounts.
For the transfer of funds, mostly the couples use the method of direct transfer. Apart from these there are other options such as changing the name of the account holder to the recipient. Some important aspects to be considered while splitting the individual retirement accounts are described below:
• Decide what amount would be given to the spouse. Set up an IRA for the other spouse. It is essential for the process of splitting the retirement accounts, that the other spouse should start a account in their own name
• The decision of the amount to be given to spouse should be finalized in consultation with your attorney and also based on the information collected about the divorce laws of your region
• Once all the formalities are completed then the next procedure is to transfer all the funds to your spouse new Individual Retirement Account. Keep a copy of the documents related to the money transfer and QRDO (Qualified Relations Order) received for further requirements
Hence while splitting individual retirement accounts; you have to take into consideration some useful aspects which are mentioned above. It will surely help in the fair distribution of the opposing parties.