How will a divorce impact your retirement plan(s)? How are retirement plans such as a 401(k), Kentucky Teachers Retirement System (TRS), Kentucky Public Pensions (public employees), a pension and even Social Security handled in a divorce?
It is interesting to note that many people don’t think about their retirement plans when considering a divorce. However, any retirement plan to which one either spouse has entered into or contributed to from the date of the marriage to the date of separation will almost always be characterized as marital property. Marital property in a Louisville divorce is to be divided equitably between the parties. This will absolutely apply to any retirement plan, account or pension. In many cases, retirement assets comprise the largest single portion of marital property.
How will a divorce impact your retirement plan(s) and associated assets? Each retirement asset has it’s own legal requirements which must be carefully crafted to protect your interests and to fulfill the requirements of the plan’s administrator. For example, in many cases the plan will require and the Court must approve a Qualified Domestic Relations Order or QDRO. The QDRO is a legal document which informs the plan administrator of the Court’s decision in your case and the resulting rights of any “alternate payee.”
Each plan usually has their own QDRO requirements and the legal verbiage and numerical information must be precise. The failure to meet the plan’s unique requirements can cost you literally tens or hundreds of thousands of dollars. This is why it is so important to work with the experienced divorce and family law attorneys at Dodd & Dodd.
Many plans have more than one option. The valuation of and ultimately division of KTRS accounts in a divorce can be legally and financially quite complex. These decisions are impacted by whether or not the account holder has already retired or is receiving a disability benefit.
Those with public retirement programs often are not eligible for Social Security benefits upon retirement. Careful consideration must be given to not only the nature, value and characterization of retirement assets in a divorce but the unique financial circumstances one will experience when retirement age is reached.
How will a divorce impact your retirement plan(s)? What is the present characterization and value of retirement assets and what will your needs be down the road? One must give serious consideration to retirement issues during a divorce even if you are several years (or decades) from retirement itself.
We invite you to review the strong recommendations of former clients and the legal industry, protect your own interests and contact us or call 502-584-1108 to schedule an appointment for a safe, confidential and private consultation with one of our experienced and proven Divorce and family law attorneys.
