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How retirement accounts are divided in divorce

Retirement accounts are one type of property some Massachusetts couples may need to divide in a divorce. To divide retirement accounts, it is necessary to complete paperwork to ensure that tax penalties are not levied. For an individual retirement account, a transfer incident is necessary. For an employer-sponsored plan or a 401(k), a Qualified Domestic Relations Order must be prepared.

Individuals also may choose a distribution option. They can cash out, have the amount rolled over into their existing retirement accounts or take distributions when the person who owns the account reaches retirement. However, one thing to keep in mind is that the type of account affects taxes. A Roth IRA is funded after taxes are paid, but pre-tax contributions fund a traditional IRA, a 401(k) or a 401(b).

If an individual can work with their ex-spouse to work out division of retirement accounts, they may be happier with the outcome. It can be less expensive and less time-consuming than turning to litigation although this is sometimes necessary.

An individual who is divorcing may wish to consult an attorney regarding issues such as division of retirement accounts and other property. There may be a number of other issues to discuss as well, including spousal support, child support, and child custody and visitation. Before visiting the attorney, individuals may want to take stock of their financial situation and write down their debts, assets and income. More complex situations may involve splitting real estate, a business or other assets. It may be possible to negotiate these issues with the spouse in mediation, and an attorney may be able to assist in this as well. However, in some cases, mediation may not be possible. Litigation may be necessary, and if this occurs, an attorney might be able to help protect an individual's rights.

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