Ending a marriage is never a road that’s easily traveled. When Louisiana couples make the decision to divorce, they have a number of issues to consider, one of which includes the decision on how to divide assets. If there are retirement plans in existence, more than likely a couple will also have to split them as well unless an agreement exists that stipulates otherwise.
Retirement plans can be complicated when it comes to the divorce process. If there is a Qualified Domestic Relations Order (QDRO) attached to the retirement plan, then a plan may be set up to pay spousal or child support. Those who receive benefits from a QDRO must report payments as though they are a plan participant, according to the IRS. When it comes to a defined contribution plan like a 401(k), those who receive payments from a former spouse’s plan can roll them over into an account of their own without tax repercussions.
Other retirement plans that may be impacted by divorce are defined benefit plans and individual retirement accounts. IRA assets are probably the simplest to split during a divorce. Once a judge decides on the split, each spouse can roll the funds over into individual accounts. If the person wants to spend those funds, they will be subject to taxes and he or she may have to pay a penalty for early withdrawal of funds.
A Louisiana divorce lawyer can further explain things like a QDRO and various types of other retirement plans and how they might play out during a divorce. Having some understanding of how these types of issues can affect the divorce process may ease an anxiety that might accompany them. A lawyer’s experience can help his or her client to make informed decisions that are in the client’s best interests.