When couples divorce in Florida, one of the most complicated parts of the process is figuring out what to do with retirement accounts like a 401k or an IRA. These assets have special rules that make them very hard to divide up like other marital property.
Dividing Retirement Assets
Retirement assets are the perfect tool for saving up for retirement. They provide tax protection for savings and a great channel to build up retirement savings. However, the rules and protections that let you save with them can also prevent you from easily dividing them in divorce. There are no easy ways to divide retirement accounts for divorce, and the specific plan rules often play a major role in the outcome.
The challenge of retirement assets and divorce is that these retirement accounts are hard to transfer as well as hard to cash out. Liquidating the account will bring with it a very large tax hit. It is generally not possible to share ownership of these accounts because they are tied to one person’s tax ID. Transferring the ownership of the account to another person may not be possible according to its rules, and if it is possible, it will carry an income tax hit. There are no easy options, especially if there are other significant financial assets that will be part of the financial settlement for the divorce as a whole.
Settling the value and the division of retirement accounts is one of the most complex parts of any divorce settlement, and it requires expert financial and legal help to minimize the tax burden while ensuring that the property division is fair.
