Divorce can be costly and time-consuming, especially if there is a large marital estate or children are involved. In addition to the emotional stress, divorce can also strain both parties financially. The first step in the divorce process is filing for divorce. The person who files for divorce is known as the petitioner. The other party is known as the respondent.
You should get legal advice from an experienced divorce lawyer who will help you understand what to expect during your divorce and the best way to protect your rights. Whether you are getting a divorce after a long or short marriage, it is important to have a lawyer on your side.
What happens to retirement accounts after a divorce?
Retirement accounts that were established during the marriage are usually considered marital property. This means that they will be subject to division during the divorce. Retirement accounts can be divided in a divorce through a process called “equitable distribution.” This is where the court will divide the retirement accounts based on several factors, including the length of the marriage, the earning potential of each spouse, and the age and health of each spouse.
There are various retirement accounts, but the most common are the following.
- The traditional IRA – This account allows you to deduct your contributions from your taxes, but you will be taxed when you withdraw the money in retirement.
- The Roth IRA – This account does not allow you to deduct your contributions from your taxes, but you will not be taxed when you withdraw the money in retirement.
- The 401(k) – This account is offered by many employers and allows you to contribute a portion of your salary before taxes are taken out. The money in the account grows tax-deferred, and you will be taxed when you withdraw the money in retirement.
- The 403(b) – This account is similar to a 401(k), but certain non-profit organizations offer it.
- The 457 – This account is offered by state and local governments and allows you to contribute a portion of your salary before taxes are taken out. The money in the account grows tax-deferred, and you will be taxed when you withdraw the money in retirement.
How will retirement accounts be divided after a divorce?
Retirement accounts are usually divided in a divorce using a process called “equitable distribution.” This means that the accounts are divided in a way that is fair but not necessarily the equal way. Factors that are considered when dividing retirement accounts in a divorce include the length of the marriage, each spouse’s age and health, each spouse’s income and earning potential, and each spouse’s contributions to the retirement accounts.