A divorce is a messy process, especially when you start to think about dividing up the assets. While it might be easy to decide who gets which car and what to do about the house, retirement accounts might pose a completely different problem.
Retirement accounts can be difficult to handle because their present value might not reflect the true value they one day will represent. But most people don’t understand how to determine this future value.
One thing that some people skip when they are divorcing is retaining someone knowledgeable in these matters to review the retirement accounts and other financial instruments. Have the assets properly valuated so that the property division is handled appropriately.
If you are dividing up retirement accounts, you should make sure that the paperwork is all in order. You will almost certainly need a qualified domestic relations order, or QDRO, issued so that the split can happen as intended. Of course, there are exceptions to this, such as if the retirement account is a SEP. One way that you can find out if you need a QDRO is to contact the plan administrator for the retirement account and ask.
These matters are always very complex, so you must make sure that you are planning accordingly. While there is always the chance that you will be able to work things out with your ex and get everything executed in a short time frame, this might not occur. Essentially, you should never count on the division of retirement accounts as a way to fund your immediate needs.
Source: Forbes, “How Divorcing Women Should Handle Retirement Accounts And Pension Plans,” Jeff Landers, accessed Sep. 01, 2017