North Carolina residents who are undergoing a divorce know that they will need to split up all of their marital assets. Most residents have a retirement account that they have contributed to during their marriage. Depending on the type of retirement account that you have, it will need to be divided in accordance with applicable law.
Determining the type of retirement plan that you have
When it comes to retirement asset division, the type of plan that you have will determine how it’s divided. There are two main types of retirement plans, which include qualified plans and IRAS. When your spouse is given a portion of your retirement funds, they will need to submit the right form to cash in.
There are two main forms. The first is called the Qualified Domestic Relations Order and this is used for qualified plans, such as a 401(k) or a pension. The second form is called the Transfer Incident to Divorce and is specifically used for IRAs and 403(b)s. The appropriate form must be submitted to the fiduciary of your retirement account.
A viable alternative to splitting the funds
While many divorced couples do decide to split their retirement accounts, that’s not always the best option. You may want to give one of your assets that is of equal value to half of your retirement account to your former spouse. By giving them something else of equal value, you can simply retain the full amount in your retirement account without having to split it. A family law attorney can often provide further guidance on this subject.