Divorce can be challenging from an emotional standpoint, and it can also significantly interfere with your finances. It’s important to make informed choices when you’re dividing assets and property with your former spouse, especially if you’re involved in a high-asset divorce. If you’re a New Jersey resident, here are a few essential points to keep in mind when it comes to your divorce and retirement savings.
How divorce affects retirement plans
Retirement savings are some of the most valuable assets people own, which means the savings account could be a point of contention in a high-net-worth divorce. Knowing how to divide a retirement account can be one of the most challenging parts of divorce since the money is subject to tax regulations. This is one of the main reasons retirement plans are often mishandled during a divorce.
If your spouse has a retirement plan sponsored by their employer, such as a pension plan or 401(k), you are entitled to a portion of the money as long as your prenuptial agreement does not state otherwise. It is important to note that your former spouse is also entitled to a portion of your retirement account if you have one.
Qualified domestic relations order
If your spouse was the breadwinner, you could protect your portion of a retirement account during a high-asset divorce with a qualified domestic relations order. A QDRO is a court order or decree about child support, property rights or alimony. During a divorce, the QDRO instructs your spouse’s pension plan provider on the best way to administer your benefits.
Pension plans can be worth a considerable amount of money, so it’s important to make sure you protect your fair sure during a divorce. Speak with a qualified family law attorney to determine how your assets should be divided once you file for divorce.