You worked hard to build your retirement and now you face divorce after years of marriage.  Dividing retirement + divorce need not spell disaster!  Remember under the law in Texas, assets split in a just and right manner.  That usually means 50% to each spouse.  In cases where one spouse caused the break-up a judge may award a disproportionate share.  Actually one spouse may receive 53% and the other 47%.

So, to avoid tax consequences, dividing retirement accounts requires careful planning and execution.   Workplace retirement accounts like a 401(k) or a pension plan, require a qualified domestic relations order (QDRO).   Because misinformation abounds regarding division of assets upon divorce, your divorce attorney should provide help.   But remember divorce attorneys are not financial advisors although decades of experience helps!  Consequently keeping well informed regarding options through expert advice ensures that dividing retirement + divorce won’t spell disaster.

On the other hand, IRAs and health savings accounts require a copy of the divorce decree and other documents.  Usually, the professional who opened the IRA and health savings account provides guidance to you.  Importantly, differences may exist depending upon the institution in which you opened your account.

A taxable investment account demands attention too.  Through negotiations, you may decide to simply sell the investment and take the tax hit – if there is one.  Splitting the investments, per the IRS, means that the spouses can keep holding periods and cost basis.  Again, remember to plan carefully, choose your attorney wisely and seek financial advice from an expert!  Call today for a consultation (281) 550-6650