When you got married, you decided to create a life together. Part of your plan was to save for retirement so that you could enjoy your favorite activities in the later phases of your relationship.
Now that it is time to think about divorce, it can seem like all your plans are going up in smoke. You and your ex may have made calculated decisions on what retirement would look like, and facing divorce can leave room for many questions.
Here’s what you should know about dealing with your retirement assets during a divorce.
Retirement accounts are usually community property
Typically, retirement is something you and your ex planned for together. Even though retirement assets may come from one person’s income or go into separate accounts, they are mostly still considered community property. In most cases, if you started the account during your marriage, it will be subject to asset division during divorce.
There are a few different approaches to dividing a retirement account. Sometimes, it is simpler to split each account and divide the asset between you and your ex. However, in other cases, it is simpler to look at the assets in your name and the retirement assets in your ex’s name and, if they are equitable, allow each spouse to keep the account in their name.
Some accounts come with challenges
The difficulty with retirement accounts is that there are specific rules for when you can make changes and when you can remove the assets from the account. If you make the wrong change or withdraw assets without the proper procedure, you could be subject to fines and taxes.
When you are going through a divorce and need to divide assets, it is essential to talk to a skilled professional. It is important to learn what steps you need to take and when to take them to avoid the consequences of early withdrawal of your accounts.