Divorce in New York can be challenging, not only because of the emotional side of the situation, but also because of the complex financial matters that must be resolved as part of this process. In New York, marital property is divided according to the equitable distribution rule. You’re likely to wonder about your financial future, especially when it comes to protecting retirement assets in a NY divorce. An experienced New York divorce attorney is the ideal asset in this situation.
Options for Protecting Retirement Assets in a NY Divorce
If you have built a retirement account over many years, you are counting on those funds to be available to you when you need them once you reach retirement age. Many people build their retirement accounts over many years, and if some or all of these years were spent married, a divorce can mean that these accounts qualify as marital property and are subject to division under New York’s equitable distribution rule.
As of 2023, the divorce rate in New York was 2.4 per 1,000 residents. Married couples decide to divorce for countless reasons, and in New York, most divorces are filed on a no-fault basis on the grounds of irreconcilable differences. Regardless of why you and your spouse have decided to divorce, you must understand the equitable distribution rule and how it applies to your retirement account.
One of the most important tools you can use for protecting retirement assets in a NY divorce is a Qualified Domestic Relations Order (QDRO). Every retirement account has strict rules pertaining to how these funds may be accessed or moved. Typically, there are heavy penalties for early withdrawals, and such a withdrawal can carry heavy tax implications.
Starting a QDRO early in a divorce case offers several advantages. The QDRO allows the retirement plan administrator to distribute funds from a single account without incurring tax penalties. For example, if you are claiming your share of your spouse’s 401(k), a QDRO would enable the plan administrator to move your share of the account into your own retirement account without penalty.
An early QDRO can also prevent the account holder from spending funds from the account in question. Once you submit a petition for a QDRO, a New York County family court judge will need to sign it, and then it must be sent to the account administrator. It may then be approved, or the administrator may send it back with requests for certain changes. If the account holder retires before a QDRO is in place, their spouse may not be able to claim anything from the account after divorce.
Ultimately, protecting retirement assets in a NY divorce is often challenging, and it is crucial to work with an attorney who has a deep understanding of the complex financial issues that your divorce case entails. The attorneys at the Levoritz Law Firm have been representing clients in New York City divorce cases since 2005 and have a long history of success with high-asset divorce cases and complex property division.
Our team can review the details of your situation and the types of accounts you control to explain your legal options for protecting your assets. QDROs may be necessary for 401(k)s, 403(b)s, private company pensions, and even some public retirement plans. Reach out to our firm as soon as possible to learn how we can assist you with filing for an early QDRO.
FAQs
What Is the Earliest Retirement Age for a QDRO?
The earliest retirement age for a QDRO is typically dictated by the retirement plan’s terms. According to the US Department of Labor, the earliest retirement age for a QDRO is the earlier of two dates: the date of distribution according to the plan, or the later of the date the plan holder turns 50 or the earliest date the plan holder could begin receiving benefits if they separated from their employer. Your attorney can assess the earliest retirement age for a QDRO in your case.
How Do I Protect My Retirement Assets in a Divorce?
The most effective way to protect your retirement assets in a divorce is to hire a divorce lawyer who can accurately assess the nature of your retirement assets and determine whether they are subject to division under the equitable distribution rule. They can help you determine which portions of your retirement accounts were acquired during your marriage, and only those portions should be subject to equitable distribution.
What Happens if a Spouse Hides Assets in a Divorce?
If a spouse hides assets in a divorce, they could face various penalties. This could result in contempt of court, and they may receive a much smaller share of marital property in the judge’s ruling on equitable distribution. Additionally, the spouse who attempted to hide assets may be forced to pay the other spouse’s legal fees.
Do I Need a QDRO if I Have an IRA?
No, you do not need a QDRO if you have an Individual Retirement Account (IRA). These are individually owned accounts that are not subject to the same federal laws as 401(k)s or private employer pensions. An IRA can be split in a divorce tax-free using a “transfer incident to divorce” filing. A New York divorce attorney can guide you through this filing process to ensure it unfolds legally according to the state’s equitable distribution rule.
Should I Hire a Divorce Lawyer for Protecting Retirement Assets in a NY Divorce?
Yes, hiring a divorce lawyer is one of the most effective steps you can take for protecting retirement assets in a NY divorce. Your attorney can guide you through the financial disclosure process, verifying that both you and your spouse have submitted complete and accurate financial records. They can explain your options for protecting as much of your retirement assets as possible from division or help you secure a fair share of your spouse’s retirement funds.
Contact The Levoritz Law Firm Today
Ultimately, every divorce entails complex financial issues, but some divorces are particularly challenging, especially when it comes to dividing retirement funds. If you have questions about protecting retirement assets in a NY divorce, the team at the Levoritz Law Firm has built a strong reputation for successfully handling complex high-asset divorce cases, so contact us today and schedule your consultation to learn how we can help.
