Many individuals in Colorado and elsewhere invest a great deal of time and money into preparing for life after retirement. While forming a strategy for this period in life may be essential, covering every possible scenario could prove difficult at best. For individuals who are going through a divorce, understanding how the process of property division might impact their retirement plans could help them avoid potentially devastating consequences.
Most couples may enter a marriage with the intent of staying together throughout the remainder of life. However, with studies suggesting that as many as 40 percent of marriages end in divorce, this might not always be the result. While it is no secret that divorce can have an impact on a person's finances, certain assets may come with additional concerns, as dividing retirement accounts without the necessary documentation could lead to disastrous tax penalties and fees.
With certain retirement accounts, such as an IRA, one must obtain a divorce decree depicting how the accounts must be divided. However, with other retirement accounts, such as a 401 (k) plan, one must obtain a qualified domestic relations order to prevent tax penalties. Since many couples may place a great deal of their wealth in retirement and investment accounts, avoiding unnecessary fees could be essential to safeguarding one's financial stability.
With the potential gravity of the outcome of a divorce, an individual may find it advisable to seek guidance early on. By speaking with a family law attorney, a person could obtain some much-needed advice on every aspect of the process, including property division. An attorney in Colorado can address all a client's concerns and assist him or her in pursuing the best outcome possible during subsequent legal proceedings.
Source: thestreet.com, "How Divorce Affects Social Security and Retirement Accounts", Robert Powell, Accessed on March 27, 2018