Tag: Splitting Retirement Funds in divorce

Depending on where your spouse works or has worked, he or she may have a retirement or pension. If he does, dividing retirement in a divorce may be necessary in most cases.  As those monies are marital property to be divided by the Tennessee Court.

Each company is different, and many require certain language in the Court Order before they comply with any division request. And if your spouse is a Federal or State employee or a member of the military – his retirement or pension and its division can be complicated.

Qualified Domestic Retirement Orders are the legal documents we prepare to divide many of the retirement plans in Tennessee. The military requires other documents that we prepare to divide military benefits.

Oftentimes, clients come to us years later with Divorce Decrees that set out that they were to receive a portion of their husband’s or wife’s retirement, but their attorney never prepared the follow-up documentation necessary to divide this retirement or pension. By then, it may be too late, as the spouse may have withdrawn all the money.

Just because your Marital Dissolution Agreement states that you get half of your spouse’s retirement or pension, it will not magically happen. The company or military is not required to abide by your Final Decree. Unless the proper follow-up documentation is delivered to them.

What are the consequences of dividing retirement in a divorce?

What are the consequences of splitting a retirement or 401k?  Usually, we prepare documents that allow your portion of your spouse’s 401k to be moved into your own individual account. From there, you may leave it with the company or move it to your retirement company.

Often, if you choose to leave the money in the retirement account, you won’t be charged except possibly a few dollars for administrative costs to accomplish the split into two accounts. However, if you cash out the money, you could face penalties and taxes for early withdrawal.

You must know as much as possible about your retirement and your spouse’s accounts before you meet with your attorney. These accounts are often one of the most valuable assets in a divorce. Therefore, your attorney must understand what you each have so that they can be fairly divided.

If you have questions about divorce or dividing retirement accounts in a divorce, contact us at https://www.kane-law.com/contact-us