Pennsylvania couples who are getting divorced should be aware that making wrong decisions about how to divide retirement assets can be very costly in the long run. Legal and accounting professionals spend a lot of time rectifying the mistakes made by divorcing couples who mishandle their retirement accounts. It is important a legal agreement is in place to avoid having to pay a high tax bill or ending up with no retirement funds at all.
An attorney who has experience with qualified domestic relation orders can help a divorcing client by filing such an agreement with the court. This is necessary for a 401(k) plan. There are no fees or penalties when the appropriate paperwork is used to move money from one retirement account into another.
Dividing pensions can be particularly complicated as each one tends to have its own rules. If divorcing couples fail to properly process the legal agreement during the divorce, there may be unexpected and expensive results.
For example, state pensions in Massachusetts may not permit a divorced spouse to continue to collect funds after he or she remarries, which may be a surprise to divorcing couples in the state where 70 percent of divorces are conducted without attorneys. In Florida, there are cases in which spouses who owned a pension passed away after the divorce was finalized and before a QDRO was completed, leaving the surviving spouses with no access to the pension funds. An attorney who practices divorce law may guide clients through the process of properly dividing retirement accounts as well as other complex assets.