When a couple decides to divorce, they go through the process of untangling their belongings to distribute everything evenly. While many people think about items such as their home, cars and shared bank accounts, they may forget about other financial assets.
Retirement accounts are a significant asset that needs just as much attention during a divorce as any other finances. This is particularly significant for couples with only one breadwinner or one retirement account.
Is a retirement account marital property?
Georgia divorce courts follow equitable property division rules. The court will attempt to divide property between the couple as evenly as possible, which may not necessarily be directly in half.
Georgia courts use the standard of marital property, which generally includes any property acquired during the marriage. However, any property acquired before the marriage is considered separate and not evaluated during a divorce.
This could be relevant for someone who is divorcing their spouse after starting their retirement account. While retirement accounts are usually considered marital property, any funds contributed to the account before the marriage would be separate property. If proof exists that a portion of funds was contributed prior, it could impact how the account is split.
Dividing accounts can be complex
Managing retirement accounts during a divorce can be more complicated than figuring out who is entitled to what funds. Early withdrawals can lead to tax and financial penalties.
In some cases, a Qualified Domestic Relations Order (QDRO) may be the best option. These orders must comply with specific federal and state requirements to avoid any other penalties.
While equitably dividing retirement accounts can be complex, it is possible for couples to do so fairly and without penalties, helping each party protect their financial future.