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Retirement accounts must be divided correctly

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In Michigan, some couples seek do-it-yourself divorces. While it is fine for people to file for divorces on their own, it is important that they avoid making mistakes when they have retirement accounts or pensions that they need to divide.

Couples who have retirement accounts and pensions cannot simply withdraw the amounts from those accounts and give the money to the spouses that should receive the funds. If they do, they may suffer substantial tax liabilities and be forced to pay early withdrawal penalties. By filing the proper paperwork, it is possible to transfer retirement account funds directly from the paying spouse's account to the recipient spouse's own account. The transfers must comply with the guidelines of the IRS in order to avoid tax liabilities and early withdrawal penalties.

Dividing certain types of retirement accounts and pensions requires that the couples complete qualified domestic relations orders and submit them to the plan administrators. These forms must be completed correctly and comply with state laws. Couples should also not agree to finalize their divorces until the QDROs are in place. If they do, the spouses who should receive money might be left without anything.

Couples who have amassed substantial balances in their retirement accounts and pensions during their marriages may have to split their accounts in the property division portions of their divorces. In addition to these types of accounts, couples who are going through high-asset divorces may need to divide many other asset classes that could potentially result in tax liabilities. Attorneys who are experienced in handling high-net-worth divorces might be able to help their clients save money and preserve their abilities to retire on time. Legal professionals might also be able to help locate any hidden assets so that their clients receive their rightful shares.

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