Retirement in a Bucks County Divorce

The distribution of retirement accounts in a divorce can be tricky.  First of all, in retirement plans such as IRAs and 401(k) plans, only the amount contributed (and its accretion of value) during the marriage years can be distributed in a Bucks County divorce.  The spouse who owns the IRA can keep any portion he/she contributed prior to the marriage.  Exactly how the remaining monies from these plans will be distributed should be discussed thoroughly with an attorney or financial advisor. There are considerable tax consequences if the IRA or 401(k) is cashed. In some instances, spouses may trade one asset for another such as one spouse will retain his/her  401(k) plan in exchange for the other spouse keeping a major asset such as a house or cash. In other instances, the value of the plan will be divided in a manner agreeable to both parties.  Pensions are a different matter since it is difficult to determine its projected value. The advice of an attorney or financial advisor is critical when deciding about dividing a pension.    

QDRO in a Divorce

Your Bucks County divorce lawyer should inform you about a "QDRO" or Qualified Domestic Relations Order.  Specifically, a QDRO is a vehicle to have your portion of a retirement account transferred into or out of your account.  This is done to minimize tax implications.  Typically, your attorney will employ a company that specializes in QDRO preparation to ensure the pension is transferred properly and to avoid IRS issues.  

As you can see, there are a multitude of issues and concerns relating to a pension and retirement account in a divorce.  You not only have to be concerned about the valuation of the account, but how it is transferred.  Very complicated stuff that requires a lot of strategy.