In the midst of divorcing it can be difficult to remember what and how everything is being split up: the cars, the house, the rental properties. But there’s one asset that many divorcing couples forget about until after it’s too late: retirement accounts.
Americans aren’t great about saving for retirement, in any case. This GoBankingRates survey found that one-third of Americans have zero dollars saved for retirement.
How can you make sure to take advantage of the retirement savings you do have during a divorce? Follow these three steps.
Step 1: Do your homework.
First you need to find out what kind of retirement accounts are out there and where they are housed. If you’re on friendly terms with your soon-to-be ex, you can ask them about it, but if not, your lawyer may have to get involved. Individuals often have more than one retirement account, like an IRA and 401(k), and there may even be multiples of those accounts if the individual has switched jobs often.
Step 2: Negotiate.
Once you know the total of what’s available in the retirement accounts, it’s time to split them. Most of the time you can count on the money earned while the marriage was intact being split evenly, though there are extenuating circumstances..
Step 3: File a QDRO.
A Qualified Domestic Relations Order must be filed and sent to a judge for approval. Because retirement benefits have specific legal requirements, it’s best to complete this step with the help of a lawyer, who will be able to make sure you retain the tax benefits of the retirement funds. The QDRO should be filed and approved before the divorce proceedings are made final, in order to avoid any headache and confusion that could arise post-divorce.