Retirement Accounts

 

“Colorado Divorce Process: Retirement Accounts”

 

COLORADO DIVORCE & RETIREMENT ACCOUNTS

The longer a couple has been married, the more likely it is that their retirement account(s) will be one of their most significant assets.  In most cases, Colorado will regard a retirement account as “marital property,” and will be divided up the same way as the rest of the real property.  Some important considerations when dividing up a retirement account are:

  • tax consequences;
  • valuation differences;
  • various issues regarding the division of certain retirement plans, especially if a party intends to cash them out.

 

You need to understand how any retirement plans you might have could be affected by a divorce, and consider strategies that will prevent your retirement plans from being jeopardized.

 

Any money withdrawn from a retirement account before age 59 and 1/2 carries a 10% penalty, as well as being considered taxable income. However, if done using a Qualified Domestic Relations Order (QDRO) as part of your divorce proceedings, you may be able to keep your retirement plans on track.

 

QDRO’s do not eliminate tax liabilities, and (depending on the type of retirement plan you have, there may be additional rules and guidelines you have to consider.  For example, IRAs and Public Retirement Plans typically require additional consideration.

 

QDRO’s require very detailed information and careful preparation; it is best to get your attorney and financial professionals (i.e. – accountant, financial planner, etc.) involved in this part of the process.  The QDRO will specifically describe how the retirement plan division conforms to federal tax law, and they must be properly valued (usually by a third party valuator).

 

Once ordered, no modification t the QDRO can be made or undone.  It is a final decision.

 

An inaccurate QDRO can have serious financial implications that extend long after the divorce is finalized – for both parties. If the division is not done correctly, you can have significant taxes assessed, or (if the plan is not properly valued) you can end up losing a lot of money. 

 

If your retirement does not allow for division, then you will need to be sure to follow the guidance of your attorney.

 

When considering a divorce and division of your retirement plans, it is imperative that you have a knowledgeable team of lawyers who will work to ensure that your future is safe.

 

At The Burnham Law Firm our Denver family lawyers specialize in Family Law and are familiar with all aspects of divorce and how it impacts our clients. Our attorneys always make sure that our client’s best interests and financial security are protected.

 

Speak With Colorado Family Lawyers About Retirement: (303) 990-5308