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Retirement & Pension Distribution

Taking Appropriate Actions to Transfer and Protect Retirement Assets

At Bennett & Associates, our aim is not simply to help you navigate smoothly through your divorce, but also to represent and protect you in crafting a resolution that considers your financial best interest long-term, taking into account your present situation and future goals.

No matter what your age at divorce, retirement planning is essential. In most cases, it is necessary to transfer retirement benefits from one spouse to the other. Every retirement plan is different and requires an in-depth understanding of different governing laws specific to the plans. This process can be accomplished without incurring tax consequences via rollover from one spouse's IRA to the other spouse's IRA or by a court order called a Qualified Domestic Relations Order (QDRO) for other types of retirement plans. In some matters, a consultation with a certified divorce financial planner (CDFA) may be helpful. As part of equitable distribution, we can help determine which assets should be transferred between the parties and manage the transfer process.

Under Pennsylvania law, spouses have a claim on the retirement or pension of a spouse, according to the U.S. Retirement Equity Act a marital party has an automatic right to survivor benefits of their spouse's pension. This means that pension funds and retirement savings are highly regulated assets that must be divided, just as other marital assets are divided during divorce.

Retirement and Pension Distribution in Divorce

The decision to divorce later in life is increasingly common. We understand and are sensitive to the different priorities and issues that must be addressed when a couple decides to end a marriage later in life. Of paramount importance is ensuring immediate financial security since you or your spouse may have already or hope to soon retire. The division of retirement benefits, consideration of how the retirement of one spouse may affect alimony and/or income, alteration or creation of an estate plan, and health care are all pressing issues to be addressed in a later-in-life divorce.

Contact our Wayne, Pennsylvania, law office to speak with a knowledgeable divorce lawyer.

Things You Should Know about the Division of Pension Assets in Divorce

The Internal Revenue Code and ERISA regulate how retirement and pension funds are exempted from taxation and distributed. There are tax implications in divorce and distribution of pension assets that few people aside from legal, tax and pension professionals, understand.

IRAs are very flexible retirement vehicles, created privately or from rollovers of corporate plans. You can transfer IRA assets into an ex-spouse's name easily, without a lot of paperwork, but you must roll it into another qualified tax-deferred account or you will face tax penalties.

cororate pension or 401K plans, whether they are defined benefit plans or defined contribution plans, usually fall under ERISA or IRS regulations and require extra work to transfer pension assets properly.

Remember Your Heirs

The Retirement Equity Act states that while a person is married, a spouse has an automatic right to automatic right to survivor benefits interest in the plan, but children do not. You may need a waiver from your ex-spouse to permit you to designate a new beneficiary if there is any possibility of a delay obtaining a decree.

At Bennett & Associates, we help clients structure property distribution in a fair and equitable manner, minimizing the tax burden while addressing immediate and long-term financial needs. Contact us to begin working on your divorce property settlement.

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I conveniently represent clients in the Bucks, Chester, Delaware, Montgomery, and Philadelphia Counties, the towns of Wayne, Radnor, Philadelphia, King of Prussia, Paoli, Devon, Berwyn, Newtown Square, Villanova, Bryn Mawr, Haverford, Ardmore, Lower Merion, Media, Wallingford, and Swarthmore, and throughout Pennsylvania.


© 2015 by Elizabeth L. Bennett, Esquire. All rights reserved.


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