There are generally three main kinds of retirement accounts that need to be addressed at the time of a divorce, and the division of this money can amount to a considerable sum, so you need to have it done right and get everything to which you’re entitled. Here’s how the courts will evaluate each of those accounts when considering a retirement in your divorce in Colorado.
IRA account
This is generally handled in a straightforward manner, with the total in the account at the time of divorce being divided between both parties. A letter of instruction must be sent to the firm managing the account, and that firm will then handle the distributions according to those instructions.
401K account
The division of money in your 401K account is valued in a similar way to the IRA, but it must be done by the lawyers involved for both parties. The actual value to each party in the divorce will be split based upon the percentage to which each party is entitled. In a community property state, for example, all funds acquired during the marriage will be split evenly at the time of divorce (unless negotiated otherwise). When the case has been finalized, a document called a Qualified Domestic Relations Order (QDRO) is prepared by attorneys in consultation with the employer who provided the 401K. This ensures that the employer’s requirements are adhered to during the division.
Pension fund
The division of your pension fund will generally go along the line of how many years you were married while you were working and contributing to the fund. If you were married the entire time, then the contemplated split would be equal, and if you worked longer than you were married, the split will be in your favor. There are some major questions involved in dividing a pension fund, though, beginning with whether the fund will be divided before or after you retire. When all issues are resolved, a QDRO is prepared and sent to the company managing the pension fund.
Retirement in Your Colorado Divorce
Handling accounts for retirement in your Colorado divorce can be one of the most important aspects of the financial part of the whole proceeding. That’s why it’s something you need to get right, and why you need knowledgeable legal representation to ensure your interests are being protected—call Colorado Legal Group today if you have further questions about dividing your retirement accounts in divorce.