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Virginia divorces and the division of retirement accounts

Virginia divorces and the division of retirement accounts

Many people have retirement accounts, either on their own or through their jobs. When people have made contributions to these accounts during their marriages, the portion of those accounts resulting from those contributions as well as the accrued interest on the balance attributable to those years may be divided in their divorces.

Once it is understood how retirement accounts will be divided, it is important to understand the forms needed for the division. Different types of accounts require different forms. These function to both tell the plan administrator how to divide the accounts and also prevents the IRS from assessing early withdrawal penalties.

For employer-sponsored retirement plans and pensions as well as 401(k) accounts, the spouse must file a Qualified Domestic Relations Order, or QDRO, while individual retirement accounts require the filing of a transfer incident form. Upon reaching a settlement agreement or the court’s order in the decree dividing the accounts, the person must then prepare the appropriate document for the plan.

In addition to the division of the correct amounts accrued in retirement accounts, other marital property of the couple will also be split in the property division. A person may want to get help from a family law attorney to try to work out an agreement regarding their property division. Reaching an agreement regarding the disputed issues in a divorce can help people to save potentially significant litigation costs they would otherwise have to pay. When people are able to negotiate agreements, the court adopts those agreements as part of their orders in the divorce case. This also can help people avoid surprises they might have when a judge decides the issues in their divorce for them.