Prevent Long-Term Savings Loss During Divorce
Louisiana residents should learn how to save retirement assets when getting divorced. If not careful, a large part of savings can be lost without need.
Any person in Louisiana who has gone through a divorce or is contemplating a divorce understands the widespread number of concerns and opportunities for loss. While some losses associated with divorce cannot be avoided, others can be minimized if not avoided altogether. When it comes to splitting retirement accounts as part of a property division settlement, there are very specific strategies that can be used to prevent unnecessary loss of assets.
Important At Any Age
Holding on to hard-earned savings is important to anyone regardless of age. However, for people who are close to retirement ages, this issue can be especially important because they will have fewer years left to work and make up any lost savings. Statistics show this is a growing concern in the U.S. as the National Center for Family and Marriage Research indicates in a Forbes article a rise in the number of people getting divorced past the age of 50.
What Are The Risks?
Because retirement accounts are intended to only be accessed after account holders reach the specified ages, any disbursements prior to that time can be subject to early withdrawal penalties as well as additional tax withholdings. When splitting funds from these accounts during a divorce, these costs can be avoided. Following are some important steps to help ensure this:
- Proper reinvesting: Forbes ran a story of a woman in California who received money from her former husband’s retirement account. The woman did not reinvest the funds and simply kept them. As a result she is now faced with a high back tax bill that could have been avoided by simply rein vesting the money in an appropriate retirement plan.
- Use of legal documentation: A Qualified Domestic Relations Order is not required for divorce-related financial transactions. However, as noted by both the Tampa Bay Times and Fox Business, using the QDRO is one of the best ways to help make sure that all entities are aware that such transactions are pursuant to divorce proceedings, thereby avoiding the assessment of unnecessary fees or taxes.
- Filing according to the calendar: When processing financial transfers related to a divorce and retirement monies, paying special attention to the stated timelines in which money can or must be transferred or reinvested is a key way of saving assets.
With the right information and care, thousands of dollars can be saved that otherwise disappears without good reason.
Getting Legal Input
Working with an attorney during a divorce can be a great way to help keep track of details like those identified above to help save retirement assets. Contacting an attorney as soon as possible during the divorce process is always encouraged.