Family Law and Divorce Attorneys – Doylestown and Newtown
Dividing retirement plans in a Pennsylvania divorce can be very complicated. When individual spouses have worked years building their retirement accounts, it is important to approach property division very carefully and accurately.
Is My Retirement Plan Subject to Division in a Bucks County Divorce?
This is one of the most commonly asked questions relating to divorce and property division from divorcing couples in Bucks County. The percentage of the retirement plan that is subject to division depends on how much of the retirement plan is considered separate or marital (“community”) property:
- Separate property — Property owned by an individual spouse. This can include any property acquired before the date of marriage, or property gifted to one spouse and not the other, and inheritance.
- Marital (“community”) property — Property acquired during the duration of the marriage and in some states, the increase in value of separate property during marriage.
Retirement plans are assets that are generally divided between the spouses upon divorce, unless part of the plan is considered separate property. Since pension and retirement benefits that are earned during the marriage are potentially of great value, it is important to understand that for many couples the retirement plans may be the couple’s most valuable assets. The sheer number of retirement plans and their composition can be very confusing and difficult to understand. Our firm works with valuation and tax experts in the division of retirement plans to ensure that a proper approach is taken in regards to methods of dividing retirement plans. We are mindful of the tax consequences of divorce and aim to help you divide your property equitably.
What is a Qualified Domestic Relations Order (QDRO)?
A Qualified Domestic Relations Order (QDRO) is a court order that assigns an alternate payee as the receiver of a portion of a retirement fund. An alternate payee can be a spouse, child, or other family member. Drafting a QDRO properly is critical, or the participant can suffer tax consequences. QDROs should be drafted only by professionals since they are complex and have a long lasting effect on the parties affected by it. Our family and divorce attorneys in Doylestown and Newtown prepare QDROs as part of our work on equitable distribution of property. We always look at the long-term results of any given settlement to ensure that our clients are fully protected and fairly treated under the law.