New Jersey residents who are going through a divorce may find that the property division stage becomes complicated when it comes to retirement plans that are owned by one of the parties. There are a variety of different types, and there is often no way to know how evenly they may be divided until they have been closely examined.
Retirement plans in a high asset divorce can consist of employer pensions, stock options, individual retirement accounts, 401(k)s and annuities. They may be worth one amount if they are immediately cashed in or a different one if they are allowed to mature.
Some retirement plans are designed to be easily divided and some are not, and the way in which they continue to accrue in value may vary widely. In some cases there may be no way to figure out exactly what their future value will be, so the plan’s value must be appraised based on the current market and estimates of future market conditions.
In most private employer retirement plans, a qualified domestic relations order must be prepared and then submitted to the court for its approval if the plan is going to be divided between the two parties. The QDRO must then be delivered to the plan administrator. In many cases, there are adverse federal income tax consequences if the plan is cashed out in an improper way. For these and several other reasons, a person who is involved in a divorce where these types of assets are at issue may want to obtain the advice and counsel of an experienced family law attorney.
Source: The Street, “Marriage Going Bust? Protect Your Retirement Plan From Going Bust, Too”, Thomas Scarlett, May 6, 2016