Retirement & Pension Distribution

Retirement and Pension Distribution in Divorce

Taking Appropriate Actions to Transfer and Protect Retirement Assets after Divorce

Under Pennsylvania law, spouses have a claim on the retirement or pension of a spouse, according to the U.S. Retirement Equity Act a marital party has an automatic right to survivor benefits of their spouse's pension. This means that pension funds and retirement savings are highly regulated assets that must be divided, just as other marital assets are divided during divorce.

Depending upon the type of retirement plan, however, dividing this asset may be more complicated than, say, dividing a bank account. It may require special legal considerations or documentation, such as a QDRO (Qualified Domestic Relations Order).

At Bennett & Associates, our experienced divorce attorneys and financial experts can help you understand the laws relating to the division of pension plans and the protections afforded to you. We will work with you to ensure your property division proceeds smoothly.

Contact our Wayne, Pennsylvania, law office to speak with a knowledgeable divorce lawyer.

Things You Should Know about the Division of Pension Assets in Divorce

The Internal Revenue Code and ERISA regulate how retirement and pension funds are exempted from taxation and distributed. There are tax implications in divorce and distribution of pension assets that few people aside from legal, tax and pension professionals, understand.

IRAs are very flexible retirement vehicles, created privately or from rollovers of corporate plans. You can transfer IRA assets into an ex-spouse's name easily, without a lot of paperwork, but you must roll it into another qualified tax-deferred account or you will face tax penalties.

corporate pension or 401K plans, whether they are defined benefit plans or defined contribution plans, usually fall under ERISA or IRS regulations and require extra work to transfer pension assets properly.

Remember Your Heirs

The Retirement Equity Act states that while a person is married, a spouse has an automatic right to automatic right to survivor benefits interest in the plan, but children do not. You may need a waiver from your ex-spouse to permit you to designate a new beneficiary if there is any possibility of a delay obtaining a decree.

At Bennett & Associates, we help clients structure property distribution in a fair and equitable manner, minimizing the tax burden while addressing immediate and long-term financial needs. Contact us to begin working on your divorce property settlement.