In understanding the various steps of a divorce, you may be wondering what marital assets will be subject to division under Indiana divorce laws. Marital assets include a variety of property acquired by spouses before the date the dissolution matter is filed. Among other assets, retirement accounts such as 401(k)s, Individual Retirement Accounts (“IRAs”), and pensions may be subject to division in divorce proceedings.
How are Retirement Assets Divided in Divorce?
In Indiana, if the retirement assets are considered marital assets to be divided pursuant to the divorce, and if they are going to be divided between the two spouses, there are typically two different methods in which the Court is able to divide them. One of those is via a transfer incident to divorce and is typically used to divide Individual Retirement Accounts (“IRAs”). By completing this type of transfer, the non-holding IRA spouse is able to receive their share of the IRA as a transfer.
The other method of transferring retirement accounts to another is through a Qualified Domestic Relationship Order (“QDRO”). QDROs are typically utilized for the division of pensions and 401(k)s. By doing this, the other spouse has a separate account that is set up and the funds from the pension or 401(k) get placed in that account.
The benefits of both methods are that neither spouse incurs a tax penalty for the division of the retirement account. Furthermore, neither party incurs a tax for the transfer either.
Creating a document to transfer retirement accounts from one spouse to the other can be tricky. Many times, the language needed to be utilized is specific to each account. The proper language also needs to be utilized for the purpose of ensuring the correct amount of the retirement account is being divided and the terms are complied with.
If you or someone you know has questions regarding the division of retirement assets, consulting with a family law attorney regarding your options can be helpful. The experienced family law attorneys at Banks & Brower, LLC can help guide you to determine whether your retirement assets are subject to division. Give us a call at (317) 526-4630 or email info@banksbrower.com to help navigate your case.