Retirement funds are commonly the largest and most difficult assets to divide in a Tulsa divorce. The value of retirement accounts can often exceed that of the marital home. So it is important to take the necessary steps to protect yourself during the division of property in a Tulsa divorce, or you may find yourself being penalized and liable for taxes when your ex-spouse withdraws his or her share of your retirement funds early.
Retirement Funds as Marital Income
In general, retirement funds are considered marital property for the purpose of a Tulsa divorce and will be divided on the basis of equitable division. In other words, along with all other marital property, retirement funds will be divided equitably based on each spouse’s contribution to the total amount of marital property and in consideration of what is in the best interest of the children. This does not mean a 50/50 split, but division in a manner that the court sees as fair.
A Qualified Domestic Relations Order (QDRO) in a Tulsa Divorce
Typically, a Qualified Domestic Relations Order (QDRO) is used to specify how retirement funds are to be distributed in a Tulsa divorce. A QDRO allows you to specify what percentage of your retirement funds are to be allocated to your former spouse for the purpose of dividing marital assets and paying child support or alimony.
Generally, when a retirement fund is divided in a Tulsa divorce, there are no tax consequences if there is a QDRO or some other court order specifying how the funds are to be divided and the funds are not withdrawn.
There are no tax consequence at the time retirement funds are divided in a Tulsa divorce and you have the option of rolling the funds into an IRA or withdrawing the funds to use as you like. However, once the funds are withdrawn, each spouse will be taxed accordingly.
Conclusion
How your retirement funds are handled in a Tulsa divorce can have long term consequences for both parties. It could mean the difference between retiring when you want and having to work several years longer in order to afford to retire. It is wise to consult a knowledgeable divorce attorney to assist you in the decisions you make regarding your retirement funds.
Tulsa Family Law Attorney: Free Consultation
Divorce, separation or other circumstances can alter financial circumstances. Estate planning, trusts, disposition of jointly-held property and preservation of individually-owned property all fall within the purview of a family law practitioner when divorce or separation upend prior family plans. To find out how the Divorce of Tulsa Law Office can assist in your Tulsa family law matter, call us today.
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