Rowe Law Offices, P.C.
Call us for a free initial consultation
610-816-0935 Local
866-232-1913 Toll Free

Divorce and the division of retirement accounts

For many Pennsylvania couples going through divorce, it's necessary to split retirement accounts. Taking an early distribution from a retirement account usually results in having to pay taxes and penalties. In the event of a divorce, however, this can be avoided if the couple completes the proper paperwork and handles the distribution correctly.

With an IRA, this process is fairly straightforward. The financial institution will probably need a copy of the divorce decree and have its own paperwork to be completed. As long as the distribution is rolled into another IRA, there should not be taxes and penalties.

A pension plan or a 401(k) requires a qualified domestic relations order. This court order, which should be prepared by a lawyer, has to be accepted by the plan administrator. Among the information that should be included in the document is whether the distribution will be into a rollover IRA. A recipient can take a direct distribution on a 401(k) without having to pay a penalty; although, it will still be necessary to pay regular income tax on the distribution.

A soon-to-be ex should remain as a beneficiary on their spouse's retirement account until after the divorce is final. Being removed beforehand can mean that if the account holder dies before the divorce, the spouse receives nothing.

A retirement account is likely to be one of a number of valuable assets that must be divided in a high-asset divorce. The couple might also have real estate or a business to divide. Property division can be a time-consuming process, but the couple may still prefer to negotiate an agreement instead of going before a judge. A negotiation may give them more control over the final divorce decree.

No Comments

Leave a comment
Comment Information
Get in touch

How Can We Help You?

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Wyomissing Office
1200 Broadcasting Road
Suite 101
Wyomissing, PA 19610

Toll Free: 866-232-1913
Phone: 570-362-6837
Phone: 610-478-7725
Wyomissing Office Location

Lancaster Office
8 N. Queen Street
Suite 1102
Lancaster, PA 17602

Toll Free: 866-232-1913
Phone: 717-207-8375
Lancaster Office Location

610-816-0935 Berks County 717-345-3208 Lancaster County 570-362-6837 Schuylkill County 866-232-1913 Toll Free
610-478-8365 Fax
BBB Accredited Business Facebook