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Rolling Meadows Retirement Account Divorce Attorney

Rolling Meadows Divorce Attorney For Fair Division of Retirement Assets in Illinois

Getting a divorce will usually require a couple to divide their marital property. While there are a variety of different types of assets that will need to be considered, retirement benefits will often be among the most valuable. These benefits may consist of retirement savings accounts such as 401Ks or IRAs, pension plans, or real estate investments held for retirement. Each type of asset will have unique characteristics that influence the property division process. Understanding these nuances is essential to ensure that a person's financial security during their retirement will be protected.

Because issues related to retirement assets can be complex, it is important to work with an attorney to ensure that they will be addressed correctly. At Ann O’Connell Law, Ltd., we help our clients understand how to determine the current and future value of these assets and the steps that can be taken to divide retirement benefits correctly during a divorce. We work to ensure that our clients will have the financial resources they need for success during and immediately after the divorce process and in the years to come.

Addressing Different Types of Retirement Benefits

There are several different types of retirement assets that may need to be addressed during a divorce, including:

  • 401Ks and IRAs: These accounts may be offered as part of an employment benefits package, or individual accounts may be created independently. The portion of the 401K or IRA that accrued during a couple's marriage is considered marital property. Depending on when an account was created and how much was contributed to it during the marriage, some or all of the funds may need to be addressed during the divorce process. Depending on how decisions related to marital property are made, an account may be evenly divided between spouses, or a portion of the funds may be allocated to the account holder's ex-spouse.
  • Pensions: These benefits can sometimes be difficult to value, since the amount that a pension holder will receive may not be known until the time of their retirement, which may be many years in the future. The way pensions may be divided will typically be based on the length of the marriage and how long the pension holder earned benefits while married. A person's ex-spouse may be entitled to receive a percentage of the benefits based on how much of the pension was earned during the couple's marriage.
  • Real estate investments: Properties or investments owned by a couple or that will be used to generate income during retirement will need to be evaluated based on the current market value and potential future appreciation. When dividing these assets, both parties' contributions may need to be considered, and assets may be divided in a way that will provide both spouses with the resources they need during their retirement.

Using QDROs and Other Legal Tools to Divide Retirement Assets

When dividing retirement accounts, pensions, and other similar assets, special care will need to be taken to avoid penalties and minimize the applicable taxes. A Qualified Domestic Relations Order (QDRO) may be used to divide qualified retirement plans such as 401Ks. With a QDRO, instructions will be provided to the administrator of the plan, and funds may be transferred out of the account without any penalties for early withdrawal before retirement age. QDROs will also be used to divide pension benefits, and they will usually specify a percentage of the benefits that will be paid to the pension holder's ex-spouse.

For IRAs and other types of investments, a similar division process will usually be followed, but a QDRO will not be required. Instead, a process called "transfer incident to divorce" is used, allowing the IRA to be divided without triggering tax consequences or early withdrawal penalties. QDROS and other similar tools should be created with the assistance of a skilled attorney who can ensure that they comply with the terms of a couple's divorce decree.

Contact Our Rolling Meadows, Illinois Retirement Asset Division Attorney

The division of retirement benefits in an Illinois divorce requires a detailed understanding of the legal and financial issues that can affect these assets. At Ann O’Connell Law, Ltd., we help our clients navigate this complex process, ensuring that their retirement benefits will be divided fairly while taking steps to secure their financial futures. To learn more about how we can help address these and other financial concerns, call 847-859-6222 or contact us online to arrange a free consultation.

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