As couples in New Jersey work through a divorce, they might be so stressed about the challenges of the situation that they do not properly plan for their retirement after divorce. However, retirement plans should be a major focus of the negotiations of the division of property.
Knowing the rules can save some stress down the road
The rules for retirement accounts and how they can be divided during the dissolution of a marriage vary from plan to plan and from state to state. To avoid costly mistakes, both parties in the divorce should educate themselves about how each plan works and about the steps and documents necessary to split the accounts. Some of the accounts, for example, can be rolled over and divided just by using the divorce decree. Others, however, will also need a qualified domestic relations order. Even if the spouses reach a verbal agreement about retirement accounts, the terms must be spelled out clearly in the divorce decree so that no legal questions arise later.
Types of accounts to consider
For some couples, retirement plans might have depended on just one type of account, but other couples may have several types of accounts. Some of these include:
- 401(k) accounts
- IRAs
- Private pension plans from employers
- Social Security benefits
How to prepare to negotiate for retirement plans
After gathering documents that show account balances and beneficiaries, each party should learn about the types of benefits available with each plan. In some plans, for example, there are survivor benefits, which some ex-spouses might wish to keep. However, these might have clauses that stop payment if that ex-spouse remarries.
Because there are many details and rules to consider in this process, you may consider speaking with a family law attorney to assist you through this process. The attorney might help you sort through all the retirement accounts and create a strategy for protecting your financial interests.