When Indiana couples decide to divorce, they may frequently consider the immediate financial issues, from dealing with spousal support to dividing property. At the same time, it is important to note that divorce can have a significant effect on both parties' retirement, even if that milestone remains years ahead. In many cases, retirement accounts and pension funds may be some of the largest marital assets to be handled in property division, and both parties may find themselves needing to dramatically escalate their retirement savings after a split.
Even though an IRA is owned by one individual, that does not prevent it from being considered a marital asset. In general, any type of account that is acquired during the marriage is considered marital property subject to division in a divorce. In addition, pensions are also generally considered marital property. The portion of the pension that was accumulated during the marriage is subject to division; this means that the effects can be much more substantial when people in a long marriage separate, while a short marriage may have relatively little effect.
Negotiating the division of these accounts can be difficult enough during the divorce. Completing the division requires additional work beyond the divorce decree, however. Pensions and retirement accounts like 401(k)s typically require a Qualified Domestic Relations Order to divide them. This special court order ensures that people will not face excessive taxes and penalties as a result of the division.
The financial effects of divorce can linger long after the emotional and practical issues are resolved, especially when it comes to retirement accounts. A family law attorney can work with a divorcing spouse to negotiate a fair settlement on property division and other matters.