As couples move through divorces Wagoner County, each spouse must turn their eyes toward the future. Assets that were once shared must be divided between the spouses. Often times, outside of the family home, a couple’s largest asset may be retirement accounts.
When a couple divorces in Oklahoma, retirement accounts may well be divided between the spouses. The handling of retirement accounts can be a complicated matter. Here are some facts that apply to divorces Wagoner County.
Marital Assets in Divorces Wagoner County
All assets acquired by a couple during marriage are treated as marital assets, with only a few exceptions. In general, retirement funds accumulated during the marriage are considered a marital asset, and subject to division during divorces Wagoner County.
An Oklahoma court takes several factors into consideration when looking at the issue of division of retirement accounts between the spouses. The court will seek to divide and distribute marital assets equitably between the spouses. The court may decide upon a 50/50 split, but it also may decide upon a different ratio depending on the circumstances.
In making this decision, the court will look at such factors as the length of the marriage, the needs of each spouse, the contributions of each spouse to the marital community, and the ability of each spouse to continue to work and accrue sufficient retirement funds on their own after the divorce.
If one or both spouses contributed a substantial amount of their retirement savings prior to the marriage, those portions may be considered to be his or her separate property and that portion may not be subject to division during the divorce. Only that portion accrued during marriage will be subject to division.
The decisions that you make now in your divorce could have serious ramifications for years to come. Understanding how this allocation should be made in your divorce and how to handle these funds without incurring adverse tax ramifications is important. Make sure that you hire an experienced Wagoner divorce attorney to help you through this process.
Issuing a QDRO
Once the court decides how retirement funds will be allocated between the spouses during divorce, it issues an order called a QDRO (pronounced “Quadro”), which is short for Qualified Domestic Relations Order. This order tells the administrator of the retirement fund that a specified portion of retirement benefits will now belong to the other spouse as part of the divorce settlement.
This is important because usually retirement benefits are not assignable to another person during the retirement beneficiary’s lifetime. QDROs carve out an exception to that rule, allowing part of the fund to be assigned to the receiving spouse.
Potential Tax Ramifications
Normally, any withdrawal of funds from a retirement account triggers adverse tax ramifications. That money is considered ordinary income and is taxed as such. In addition, early withdrawal of retirement funds can trigger an additional tax penalty payable to the IRS.
However, if handled correctly during divorces Wagoner County, neither spouse will suffer adverse consequences during the QDRO process. The QDRO acts like a directive allocating funds from a retirement vehicle to another person. If these funds are rolled over into another retirement vehicle such as an IRA, without either spouse “touching” them, the payment of taxes will be delayed until withdrawal at retirement age, and there will be no penalties assessed.
Free Consultation: Wagoner Divorce Attorney
When your marriage plans unravel, get the best legal counsel available. Don’t go it alone. Get an experienced, reliable Wagoner divorce attorney on your side.
Contact the Wirth Law Office – Wagoner at 918-485-0335 today to schedule your free, no-obligation consultation.