Getting divorced can be difficult no matter a person’s age or the length of the marriage. However, couples who are closer to retirement may have to deal with issues that are specific to their ages and unique circumstances. Specifically, how to secure financial stability for retirement after a divorce is often a central focus in these situations.
Most people in West Virginia begin saving for retirement early on in their careers. But what happens to the years or even decades worth of savings when a married couple decides to divorce? Like other marital assets, couples must divide their retirement savings. Doing so can be tricky though, particularly if one person started saving through a specific account before marriage and then continued contributing to it after tying the knot. The type of account can also impact how a couple divides their assets.
A Qualified Domestic Relations Order is one method for splitting up retirement savings and is commonly used for defined contribution plans, like 401(k)s. The QDRO allows individuals to withdraw money from the plan or account in order to satisfy a divorce decree. These withdrawals will generally not be hit with any taxes or penalties, although exceptions do apply. The recipient of the retirement funds can roll over the money into a new retirement account or may use the money in another manner. If the individual chooses the latter, then he or she will likely be subject to the regular tax penalties for early withdrawal.
While there is no wrong age to divorce, a West Virginia couple going through a divorce later in life might need to pay extra attention to their retirement assets. People spend decades putting away money for their retirements, and virtually no one wants to reach the end of their working years to realize that they no longer have enough to support themselves. This is why working with an experienced attorney can be a good idea for those who have a lot on the line during divorce.