One of the more challenging outcomes of divorce is the process of reorganizing your finances. You no longer have your spouse providing additional income and if his or her responsibility was money management, that task now falls on your shoulders.

As you establish a budget for yourself and set new goals for your future, one thing to begin thinking about is your retirement. Any shared retirement assets you previously acquired with your spouse will require careful management to effectively split them between both parties.

Splitting 401(k) and IRA

If you share common retirement accounts such as a 401(k) or IRA, there are specific ways to separate these assets. Moving money around without knowing what you are doing can result in disappointment and costly losses. To avoid having to pay penalties for early withdrawal, make sure you understand the correct way to manage and move these accounts.

According to The Motley Fool, splitting your 401(k) requires a QDRO or a Qualified Domestic Relations Order. This formal legal document will outline the distribution of this employee-sponsored or personal retirement account. Whether you choose to roll your portion into a different account or receive distributions from the current account after retirement, a QDRO will include those details.

An IRA does not require a QDRO, but does require careful planning. Splitting your IRA is often part of divorce negotiations. However, remember to never move IRA funds around as a distribution which could cost you a penalty. Rather, label the funds as a transfer before moving them to another account for yourself or on behalf of your spouse.

Saving for your future

According to Forbes, one of the biggest mistakes you can make is to cash in your investments or retirement accounts early. While paying bills may seem daunting as you get back on your feet, never rely on your investments or retirement benefits for this purpose. Carefully assess your financial condition and what you can do to increase your savings while continuing to pay your bills.