Going through a divorce is a stressful, emotional time. While the breakup of your marriage may be hard to contend with, it is important to realize that decisions you make now could have a significant impact on your financial security in the years to come. Marital property settlement is an important part of most divorce proceedings. In addition to homes, cars and personal property, you must address the division of retirement benefits. 401(k) benefits can be confusing, which makes it important to have a trusted attorney on your side looking out for your best interests.
Equitable Division and 401(k)s
Georgia is an equitable property division state. This means that most property earned, accumulated or otherwise acquired during the marriage is to be divided in a way that is fair, though not necessarily equal, to both parties. Under Georgia divorce laws, 401(k) benefits may be included as part of your property settlement. There are many ways these retirement benefits can be divided:
- Benefits recipients can request a direct transfer into their own retirement fund, which avoids any penalties.
- Benefits recipients can elect to defer payments until they reach retirement age, then claim the benefits in either a lump sum or monthly payment. This can also avoid any penalties.
- Benefits recipients can elect for an immediate payout. This would likely incur taxes, along with a ten percent early withdrawal penalty.
QDROs and 401(k)s
Funds being divided from a 401(k) will almost always require a court order to be transferred. The Internal Revenue Service (IRS) advises that a Qualified Domestic Relations Order (QDRO) is needed before any distributions can be made by the 401(k) plan administrator. A QDRO is a Court Order that identifies the benefits the receiving spouse is entitled to receive and also informs the administrator how to transfer those benefits.
Reach Out to Us for Assistance
Obtaining retirement benefits through your divorce is an important part of providing for your future security. Before signing any agreements, contact Stearns‑Montgomery & Proctor and speak with our experienced Atlanta divorce attorneys to ensure you are getting the maximum amount. We can arrange a one-on-one consultation to review your case in one of our four offices located in Atlanta and the surrounding areas. Call or contact us online today.