Valuation and Division of Retirement Accounts
Central New Jersey Divorce Retirement Asset Division Lawyer
Baby boomers are divorcing at increasing rates, and when people divorce in their 50s or later, the division of marital assets is likely to affect their retirement lifestyles profoundly. Some of the most significant assets many couples have acquired during their marriage – and the most essential to financial health in the long run – are retirement accounts.
When the finer details of retirement benefits and the laws that regulate them are not carefully considered during the process of divorce, parties may later discover that they have received less than the full retirement benefit that might have been available.
Proper valuation and intelligent planning is crucial. To value financial assets, the lawyers of Kingston Law Group often work with forensic accountants, CPAs, investment advisers, tax experts and economists.
Tax And Value Considerations In Division Of Property
Many couples may have several different retirement assets – a 401(k), a Roth IRA or a pension or stock option plan. In addition to the value of these assets at the time of divorce, and their estimated value at the time of retirement, it is necessary to account for tax liabilities.
For example, a 401(k) will be taxed when it is withdrawn during retirement. A Roth IRA will not be taxed when it is withdrawn. For a spouse who receives a portion of his or her ex’s 401(k) or 403(b) during divorce, there is a one-time window in which it is possible to withdraw money without incurring the typical 10 percent tax penalty. If circumstances allow, it may be wise to do so and stash this away into an IRA.
In another instance, if a couple has a $250,000 IRA and a $250,000 home, it is not necessarily wise to take the home and leave the IRA with one’s ex. The future value of a home is difficult to assess, and with homeownership comes a number of expenses, among other issues.
Pension valuation demands professional financial calculation, as well. In order to equitably divide a pension benefit, it must be converted from a future stream of payments to a single present value.
Thoughtful and careful analysis by qualified financial and legal counsel minimizes the financial risk posed in any divorce scenario involving division of property.
Contact a Retirement Assets Division Attorney
To schedule an appointment, please call 609-683-7400, or contact us online.