Dividing Retirement Assets in a Hackensack Divorce
When a couple gets divorced, they usually are faced with the division of their marital property. Among these assets may be retirement plans, such as IRAs, which are subject to unique provisions regarding their distribution.
If you are planning to end your marriage and are unsure of how to handle your retirement assets or those of your partner, reach out to Moskowitz Law Group. A skilled attorney can assist you in dividing retirement assets in a Hackensack divorce, ensuring that you are fairly represented during this process.
The Process of Allocating Retirement Benefits in Hackensack
In most cases, the division of retirement plans is addressed during the process of a divorce and is executed when the divorce is finalized. Retirement assets are included in the marital settlement agreement, which lays out which property goes to each spouse in a divorce. While this outlines the division of assets, the actual distribution is often done afterward by way of qualified domestic relations (QDRO) order, which creates an alternate payee.
Factors that Impact Division
When dividing assets, especially retirement plans, it is always important to take into account taxes and penalties. Retirement plans are not usually liquidated and paid out but instead divided by way of a court order or creating a separate entitlement to the individual’s share. To calculate the proper present-day value of a retirement plan, one will need to take into account the impact of taxes and penalties. A skilled attorney can help someone determine the value of a retirement plan and explain how it may be divided during a divorce.
The Immediate Offset Method
In some scenarios, a spouse wants to keep a certain asset, such as a home, but there is equity in the home. This individual, under regular circumstances, would have to give their spouse half of the equity in the home. Using the immediate offset method, an individual could avoid having to pay out this equity by offsetting it with another asset, such as a bank account. This way, neither spouse has to pay off equity in these assets and can instead each retain certain property.
The immediate offset method can be used for retirement plans so that the earning spouse does not have to deal with distributing their plan, and the other spouse can retain another asset in its place. When using the immediate offset method to divide retirement assets, the retirement account must be adjusted to present value. This allows it to be offset against other assets. A seasoned Hackensack attorney can help individuals assess the nature of their retirement assets to ensure that one party does not have an unfair advantage over the other when exercising an offset.
The Deferred Distribution Method
While the immediate offset method allows a spouse to be paid right away for their earning spouse’s future retirement, the deferred distribution method allows for retirement benefits to be divided after the earning spouse retires. This method can be beneficial to the paying spouse, as they are not obligated to pay a lump sum amount and can instead pay small increments over time.
When it comes to retirement assets, there may be situations where there is not enough property in the marital estate to offset a retirement plan. When there are not sufficient assets to support the immediate offset method, this is often a reason to use the deferred distribution method instead. The best method for allocating retirement assets can vary depending on a number of factors, so it is always best to consult with an attorney who can explain these methods in more detail.
Discuss Dividing Retirement Plans in a Divorce with a Hackensack Attorney
Retirement plans can make up a significant portion of the marital estate. It is important to treat these assets with care during the property division process, and a skilled attorney can ensure that this happens. If you are facing dividing retirement assets in a Hackensack divorce, do not hesitate to seek legal counsel.
Our dedicated team at Moskowitz Law Group can assess your situation and help you determine the best method of retirement asset distribution give the unique facts of your divorce. Call today to learn more.