Sunday, November 11, 2012

Retirement Accounts

One of the biggest mistakes people make when they do their own divorces or use a paralegal/legal document assistant to help them, is not dividing the retirement account properly.

Certain types of accounts need to have the company joined to the suit as a "party" so that they are on proper notice of the final division and can therefore properly pay out to each party once they reach retirement age.

There are attorney's that are specialists that handle these types of accounts. They are called QDRO specialists and they are quite pricey - but cost less then trying to go after the 401k/pension company 40 years from now when you retire. Generally when I have clients with small amounts in their account at the time of divorce, I have them exchange it for another asset or see if they can roll it over into an IRA in their own name immediately. If those options are available they will be far cheaper than a QDRO specialist and there is usually not a point in paying 5-10k to restructure retirement accounts that are only worth 10k themselves.

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