How are 401(k), IRA Accounts and Hidden Assets Handled in a Divorce?
Bethesda Divorce Lawyer
Outside of child custody, finances are one of the most contested issues in a divorce. From the initial temporary support, to asset division to a permanent support schedule (which can include alimony, child support, or some combination of the two) I have extensive experience handling even the most complex financial situations through a divorce.
Step 1 – Getting Access to Information
One of the biggest hang-ups with finances early in the divorce process is simply getting access to the information. It’s fairly common for one spouse to not have access to some or all of the important financial information. To put together a full picture of your financial situation, we need access to key information including:
- The combined and individual income of both spouses
- Checking Accounts
- Retirement Accounts – 401(k), IRAs, Savings Accounts
- The estimated value of any real estate owned during the marriage
Everyone’s situation is unique and there may be additional factors that we need to consider. What’s important is that you have an attorney on your side who is willing to do the work and research to either ensure that you receive what you deserve, or that you are not paying out more than you need to be.
What is a QDRO?
If you or your spouse have been contributing to a 401(k), IRA account or other tax-deferred retirement account, splitting them can be complex. Generally, there are early withdrawal penalties and tax implications if you take money out of most retirement accounts. However, a QDRO, or Qualified Domestic Relations Order essentially splits the retirement account into two accounts maintaining the account’s tax status while dividing the value of the account between two people. This Order is unique to divorce cases.
Step 2 – Developing a Plan
Many people have the misconception that they will bring their situation in front of a family law court and that a judge will tell them what happens next. The fact is, before you ever step into a court room you should have a fairly solid blueprint of how you and your ex-spouse plan on handling key financial issues. Often assets are tied into retirement accounts that have early withdrawal penalties or tax complications. In those cases, we can negotiate a buy-out, or there are tools we can use to effectively divide the retirement account into two accounts without doing a withdrawal and avoiding tax issues.
Step 3 – Approval
Once we have outlined a financial plan that is within the guidelines of the Maryland family courts that you and your ex-spouse can both agree to, we take it to the court for approval.
Step 4 – Enforcement & Modifications
In the case that your circumstances significantly change, or your spouse is not abiding by the agreement, I can help you enforce the agreement through the court.
Start Today with a Free Initial Consultation
Wrapping your head around the entire divorce process can be difficult. I will help you take it one step at a time. Call or email me today to arrange a time for a meeting.