Divorce is an emotional rollercoaster. One day you may feel good about what you are doing. The next, you may begin to wonder if you are making the right decision. In addition to the whirlwind of emotion, you can expect to be faced with a variety of financial challenges. This often means the division of retirement assets.
No matter how much money you and your former partner have saved for retirement, this will come into play when going through a divorce. While you want to get what is owed to you in divorce, there is something to consider: the pitfalls of dividing retirement assets. This is easier said than done, since there are many challenges that could arise along the way.
Here are some things to be aware of:
— Taxation concerns. Before you agree to anything, make sure you are 100 percent familiar with how this is going to change your tax situation.
— Timing. This is more of a concern when the couple is hovering around retirement age, but it is always something to consider.
— Type of transfer. Don’t assume that all retirement accounts are the same. How are you going to transfer assets from one account to another, and what impact will it have?
When it comes time to split retirement assets in divorce, you never want to assume that you know everything. Instead, you should realize that there are pitfalls waiting for you around every corner. As long as you move forward in the appropriate direction, answering every question as it comes up, you should be able to deal with this part of the divorce process.
Source: Bankrate, “Splitting up retirement assets in a divorce,” accessed July 28, 2015