If you are close to retirement and facing a divorce (sometimes called a “gray” divorce), the issues you will need to address are at least somewhat different than those faced by younger couples. For example, you probably do not need to worry about child custody, as your children, if there were any, may already be grown and out of the house. You do likely have a lot more assets in the form of bank accounts, retirement funds, shared real estate, and more that will have to be split between the two of you.
Where to Begin
Even if both parties are willing to share and compromise, there is more to splitting certain funds than one may realize. Rather than being able to just share an IRA or 401(k) like you might do with a bank account, there are rules that must be followed to avoid various fees and taxes. Often, individuals who have passed their middle-aged years have a variety of retirement accounts, and they can be tricky.
An experienced attorney can help you navigate through all the laws and regulations to make sure you and your soon-to-be-ex-spouse both get a fair deal. However, it is important that you be realistic and keep in mind that you will likely end up taking at least a minor financial hit. Transitioning from one household to two separate households will obviously mean, except in rare cases, a major increase in expenses.
Also, there is no way to getting around sharing your retirement accounts, unless of course the other party agrees not to touch it in your settlement. Even if it did come directly from your hard-earned income, it also was technically from your mutual marital income.
What Is a QDRO?
Your attorney will explain to you that a QDRO (qualified domestic relations order) will be needed to split a 401(k) account without facing a lot of fees. A QDRO is a one-time break that allows you to share your retirement funds with the other party, without being subjected to a penalty. If you take out any more money to use elsewhere, there will be a penalty on that portion of your withdrawal if you are younger than 59½. A QDRO will not be needed for an IRA, but if an IRA is split, it will have to be done officially in your divorce decree or separation agreement in order for the IRA custodian to honor it. If you take the money out directly from an IRA, there will be a penalty for those under 59½, but if it is rolled over to another IRA, there is no penalty.
Contact a Knowledgeable Elmhurst Divorce Attorney
The attorneys at Weiss-Kunz and Oliver, LLC, will know exactly how to help you with your divorce. Our experienced Oak Park divorce attorneys will know exactly how to split all of your assets and debts in the best manner to avoid any unnecessary fees. Call 312-605-4041 to inquire about setting up a consultation.