Highlands Ranch Division of Retirement Accounts, Pension Plans, and QDROs
Attorneys Working to Protect Your Retirement Assets
Dividing personal and residential property in a divorce is tricky enough, but how do you go about valuing and separating more complex financial property like retirement accounts and pensions? The Highlands Ranch retirement account division lawyers at Plog & Stein, P.C. have been working with clients on these complicated financial matters for decades. We are able to coordinate a complete analysis of your assets to help you determine the best steps to take during your divorce, with the goal of protecting your financial interests throughout the process.
You might be surprised to learn that any equity gained in a retirement account during the course of your marriage is considered marital in nature and is subject to division in a divorce. Contrary to common belief, courts are not concerned with whose name the accounts is in or whether they were the one whose employment led to the asset’s growth. Colorado law sets forth that marital property shall be divided equitably between the spouses. Additionally, the timing of the acquisition of these types of accounts will determine what portion will be considered marital property and what portion will be deemed separate property. Once you’ve determined which accounts are marital property, the value of each account will be decided upon and divided between the two parties. An experienced retirement account division attorney in Highlands Ranch will be able to advise you on how the valuation and division of retirement accounts in Colorado works.
Retirement Accounts, Pension Plans, and QDROs During a Divorce
Retirement funds may be defined benefit plans or defined contribution plans. The former, generally referred to as “pensions,” are plans in which your employer has promised to pay you a benefit when you reach retirement age. The employer contributes to the plan, and you might as well, depending on the terms of the specific plan. The benefit is usually based on years worked for the employer and average income, and the benefits may provide a steady stream of income until you die. The defined contribution plans are retirement plans in which you have your own account with a certain sum of money in an investment account, such that the investments grow and build. With these types of plans, generally, both you and the employer contribute, with the employer often matching your contributions. Included in this type of plan are profit-sharing plans, 401(k) plans, and Individual Retirement Accounts (IRAs). Sometimes the entire plan is marital property, but sometimes only part of it was accumulated during the marriage, so there may be a separate property portion that is not subject to division.
After the value of the marital portion of the retirement accounts is determined, your spouse and you can negotiate over how to divide the accounts, or you can have the court make this decision for you. Either way, it is crucial to retain a divorce attorney so that you are fully abreast of what is fair and how the division of these types of accounts work. Valuation of a pension and a defined contribution plan involve different methodology and understanding the differences is important. The actual division also matters, as there can be tax and penalty consequences if the division is not done correctly.
Generally, all withdrawals and transfers of retirement assets are subject to a penalty of 10% for early withdrawal when the plan participant is under age 59 1/2. However, transfers incident to a divorce are not taxable pursuant to I.R.S. Code. For purposes of dividing either a pension or defined contribution plan, the transfer is generally done using a Qualified Domestic Relations Order (QDRO). The QDRO is a court order signed by a judge that divides qualified retirement accounts during a divorce and must be accepted by the administrator of the retirement plan, presuming it maps up with the dictates of the plan. The QDRO will be very detailed and needs to follow federal tax laws and be free from mistakes and inaccuracies. Dividing funds from an IRA incident to a divorce is also a non-taxable event, though division is usually accomplished via rolling funds from the participant’s account into an IRA set up for the recipient. From there, the receiving spouse is free to do what he or she chooses with the proceeds.
Usually, defined contribution plans and IRAs may be valued easily, as monthly statements reflect the value. Pensions are generally going to be divided via a formula, which accounts for years of years of marriage mapped up with hears of service. This formula alleviates the need for a formal valuation and the receiving spouse gets paid when the participant gets paid. In some cases, it may be advantageous to obtain a present valuation of a pension, via an expert, particularly when there are other offsetting assets.
Certain retirement accounts, such as PERA, will not permit you to split a retirement account by force. In these instances, an experienced retirement account division attorney in Highlands Ranch can look at alternatives to making sure you are compensated in one form or another, even if an actual division does not occur.
Effective Retirement Account and Pension Plan Division Lawyers Serving Highlands Ranch Residents
The division of retirement assets is a major issue for many of our clients going through a divorce. We know how to pursue retirement accounts interests for both the plan participant and his or her spouse. Without the assistance of a knowledgable attorney, property division can be a perplexing and convoluted process. Be sure to have a Highlands Ranch retirement account and pension plan division attorney on your side who knows the intricacies tied into retirement accounts and has the know-how to wade through negotiating and protecting your financial assets.
At Plog & Stein, our Highlands Ranch attorneys are ready to meet our clients’ needs in connection with retirement accounts, pension plans, and QDROs. We can advise you on how to divide important retirement assets and make sure that you are protected appropriately in the separation agreement and QDRO. Our retainer rates are competitive. Contact Plog & Stein, P.C. at (303) 781-0322, or use our online form to set up an appointment with a Highlands Ranch retirement account and pension plan division lawyer. We also represent people in Aurora, Centennial, and Castle Rock, as well as other areas of Denver, Douglas, and Arapahoe Counties.