Some Minnesota couples who are going through a divorce may be surprised to learn that the portion of their retirement plans that is attributable to contributions made during their marriage may be considered marital assets. Unlike other aspects of property division, there are differences as to how these assets are to be allocated in the event of a divorce. Understanding how different types of retirement assets should be handled under the law can greatly reduce the expense and stress of the divorce process.
A properly-prepared Qualified Domestic Relations Order can help save federal income tax penalties when dividing up a spouse’s 401(k), and once issued by the court it will need to be submitted to the plan administrator. An individual retirement account will require a transfer incident to be submitted to the IRA administrator in order to avoidtax penalties resulting from an early withdrawal.
A valid prenuptial agreement may have already spelled out how retirement funds will be distributed in the event of a divorce. In such a case, each spouse may want to have their respective family law attorneys review it in order to make sure that the provision relating to property division is enforceable.
When a person with significant assets is going through a divorce, the issue of property division can often be complex. In addition to retirement accounts, the marital property might include art, heirlooms, real estate and other valuable assets, some of which may be difficult to properly value. An attorney representing a divorcing spouse might recommend the services of a forensic accountant in this regard prior to negotiating a comprehensive settlement agreement.