Highlands Ranch Division of Retirement Accounts
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 property 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 Highlands Ranch divorce, with the goal of protecting your financial interests throughout the process.
Dividing Your Retirement Accounts in a Divorce
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 property division attorney in Highlands Ranch will be able to advise you on how the valuation and division of retirement accounts in Colorado works. Valuing a pension is not the same as valuing a defined contribution plan. Unlike 401Ks or IRAs, pensions do not have an exact, cumulative dollar amount. 401Ks and IRAs are lump-sum accounts that normally have an easily observable value. When dividing pensions, there are two potential methods. Often, a specific valuation is not needed when the parties agree to divide the account via the “time rule formula,” which looks at years of service/contribution correlated with years of marriage, factors in the appropriate division percentages, and then divide up the monthly amount received at the time of retirement. In cases with significant, offsetting assets, it might be more advantageous to utilize the services of an expert to do a present valuation of the pension. Each case is different and your attorney will work with you to determine your needs and what makes sense for your financial future.
Though 401Ks and IRAs have readily ascertainable values, there can still be issues related to determining the marital portion when some proceeds are premarital or perhaps when there is a loan against an account. This can include retroactively tracing funds that might have been in a different account prior to marriage and were then rolled over into a new, or multiple accounts over the years. In any case, it’s imperative not only to appropriately assess a retirement asset but to also obtain the requisite proof for purposes of proving marital value to the court or other side.
Dividing up retirement accounts must be done correctly to avoid tax penalties. Under normal circumstances, taking funds out of this kind of account means incurring a 10% penalty if you are under 59 ½ years of age. Fortunately, transfers during a divorce are not subject to this penalty. In separating out the value of a pension or a defined contribution plan, the transfer is generally done using a Qualified Domestic Relations Order (QDRO). Most family law attorneys in Denver will be able to connect you with an expert to draft a QDRO and will not draft it themselves. QDROs are very technical documents that must be free from any mistakes or inaccuracies and need to follow strict federal tax laws and guidelines. As such, they require special expertise.
It is important to note that certain retirement accounts, such as a PERA or military retirement accounts, come with different sets of rules for division. Sometimes, creative solutions are needed when dealing with these types of accounts. Having a family law firm with the experience of dealing with the division of retirement accounts and other complex assets matters when it comes to determining your financial future. At Plog & Stein, our attorneys have years of experience dealing with both divisions of retirement assets and the Douglas County court system.
Effective Property Division Lawyers Serving Highlands Ranch Residents
The division of retirement assets is a major issue for many of our clients going through a divorce in Denver. 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 property 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. Call us at 303-781-0322 or contact us online to set up a consultation to discuss your property division case.