Retirement Account Division Lawyers Bergen County, NJ
Helping Clients in Dividing Their Marital Retirement Assets During a Divorce
Retirement assets can be some of the most valuable assets divided between spouses during divorce. While valuing retirement assets can often be relatively straightforward, dividing them fairly is a far more complicated process, especially when you consider that retirement accounts can be subject to withdrawal penalties, taxation, vesting and more.
With more than 75 combined years of experience, the Bergen County divorce attorneys at Townsend, Tomaio & Newmark, L.L.C. fully understand the relevant issues and concerns at stake in when dividing complex assets like retirement accounts during a divorce. Our firm assists clients in separating their marital retirement assets during a divorce. Contact our firm today to learn how we can help.
Dividing Retirement Assets during a Bergen County Divorce and Qualified Domestic Relations Orders (QDRO)
Many retirement plans such as a 401k or an IRA will penalize for early withdrawal of funds from the retirement account. This means that if you want to divide the funds contained within a retirement account as part of your divorce’s division of asset agreement without suffering from these penalties and taxes, you will most likely want to have your Bergen County divorce attorney file for a “Domestic Relations Order”. These orders come in the form of “Qualified Domestic Relations Orders” (QDRO) and “Non-Qualified Domestic Relations Orders” (DRO).
Plans which “qualify” for early withdrawal for purposes of being divided during divorce include:
- 401(k) plans
- 403(b) plans
- Traditional IRAs
- Savings Incentive Match Plans for Employees IRAs (SIMPLE IRAs)
- Simplified Employee Pensions (Often shortened to SEPs)
Plans which will not qualify for early withdrawal without being taxed or otherwise penalized include:
- Mutual Funds
- Money Market Funds
- Certificates of Deposits (CDs)
- Bank Savings Accounts
Asset Division Lawyers Accurately Value Your Retirement Plans
In the simplest sense, retirement assets such as 401(k)s do have a definitive dollar value attached to them. However, other complicating factors may cause the value to go up or down from what is on the plan statement. Our Paramus divorce attorneys will need to consider the following to give you an accurate valuation of your retirement assets.
Date of plan inception – This is particularly relevant if the plan was open before the spouses were married. If so, the contributions made before the marriage, or after either party files for divorce, should not be considered community property
Dividends and payouts on retirement plans – which were active before a divorce cannot simply be subtracted from the current plan’s value. As values appreciate and compound, the calculation can become quite complex. Our experienced attorneys have resources to determine the true value of the plan which can be considered community property vs. joint tenancy
Pension plans – which may change in value depending on how long the beneficiary continues to work. This is further complicated by cost of living adjustments that may come into play at a later date
To reiterate, a QDRO or DRO is required to split retirement assets regardless of the rest of these factors. This will require a court order from a New Jersey state judge and will allow the assets to be divided without immediate tax payments which would otherwise be required.
Equitable Distribution Attorneys Discuss Alternatives to Dividing 401(k)s and IRAs
To avoid the hassle of requesting a QDRO or DRO, some clients may choose to not split retirement assets, instead opting to evaluate them against other assets. Retirement plans may be complicated to split, but they do have a concrete dollar value attached, which can make this option appealing.
For example, if a married couple had a family home which was valued similarly to a retirement plan, it may be in the best interest of both parties to simply value the retirement plan against the home and each would retain one of those assets. In this way, we were able to avoid the hassle and further complications of QDROs and the complications of selling the family home.
When handling divorces involving complex financial assets such as retirement accounts, family-owned businesses, or real-estate holdings, our goal is always to find solutions which accurately reflect our clients’ unique needs and concerns, and which properly protect their individual financial interests both in the short term as well as for years to come.
Contact our Hackensack Retirement Plan Division Attorneys Today
At Townsend, Tomaio & Newmark, our attorneys have extensive experience helping clients protect their retirement assets as they go through the divorce process. We believe in working closely with our clients to provide the individualized solutions required to amicably resolve any issues surrounding your divorce. Dividing retirement assets can be a daunting task. We are led by three lawyers who have been distinguished as Certified Matrimonial Law Attorneys by the Supreme Court of New Jersey, an honor held by only 2% of practicing NJ attorneys. To speak with our legal team today in a free and confidential consultation regarding your alimony agreement, or any kind of alimony modification issue you may have, contact our firm today.