Glen Ellyn Retirement Account Division Attorneys

Lawyers Assisting With IRAs, 401(k)s, and Pensions During Divorce Cases in Glen Ellyn, IL

When a couple has been married for a significant amount of time or has a high net worth, their retirement assets may be some of the most valuable components of their marital estate. Ownership of retirement accounts or benefits can affect a person's long-term financial stability following their divorce. Whether retirement assets consist of employer-sponsored plans, personal investment accounts, or government pensions, it is crucial to ensure that they will be addressed correctly during the property division process.

The value of retirement accounts is not limited to their current balances. These assets can provide future financial security, and missteps during a divorce could lead to financial hardship many years later. Because retirement assets are often accumulated over long periods of employment and may include contributions made both before and during the marriage, distinguishing marital from non‑marital portions can be challenging. A thoughtful approach to dividing these benefits can ensure that a person will receive a fair share of marital assets while avoiding unnecessary tax consequences or withdrawal penalties.

The attorneys at A. Traub & Associates work with our clients to make sure they understand the retirement benefits that may be subject to division and the steps they can take to protect their long‑term financial interests. Through a detailed review of statements, contribution histories, employer policies, and tax implications, we can make sure these assets are valued accurately and divided in a manner that will provide our clients with the financial security they need.

Types of Retirement Assets Addressed During Divorce

Retirement benefits may take many forms, and each type will involve unique considerations during the divorce process. Retirement assets earned during a couple's marriage are generally considered marital property, and they may include:

• Employer‑Sponsored Plans: These accounts may include 401(k) plans, 403(b) plans, and similar programs that allow employees to accumulate tax‑deferred savings. Contributions and earnings that accrued during the marriage are usually subject to division.
• Individual Retirement Accounts (IRAs): Traditional and Roth IRAs may be divided, but the method for division may differ from employer-sponsored plans.
• Pension Plans: Pensions will provide payments upon retirement based on a person's salary history, years of service, and other factors. Because pensions represent future income rather than current account balances, actuarial valuations may be necessary to determine their present value.
• Government or Military Retirement Benefits: These plans often contain rules that are distinct from private retirement programs, and special orders may be required to ensure that they can be divided correctly.

Dividing IRAs, 401(k) Accounts, and Pension Benefits

There are a number of options available when dividing retirement accounts and benefits. The funds in an account may be divided between spouses equally or in other percentages depending on the decisions made in a property settlement. However, withdrawing funds from an account and transferring them to the other spouse can result in penalties, since these accounts are meant to provide for a person's needs after they reach retirement age. Taxes will also usually apply when amounts are withdrawn.

The proper methods must be used to transfer funds out of a retirement account or to allocate pension benefits between spouses. The specific procedures followed will depend on the type of accounts and the rules governing them:

• 401(k) Accounts and Similar Employer-Sponsored Plans: These accounts will typically require a Qualified Domestic Relations Order (QDRO) to divide the funds. A QDRO directs the plan administrator to allocate a portion of the account to the account holder's former spouse. Once the funds are distributed according to the order, the receiving spouse may roll the amount into a retirement account in their name. This will prevent taxes or penalties from being assessed.
• IRAs: These accounts may be divided through a transfer incident to divorce. This process allows transfers to be made from one spouse's IRA into an account owned by the other spouse without taxes or penalties, as long as the transfer is completed according to the divorce decree.
• Pensions: Dividing pension benefits can be complex, because the benefit may not be payable until the pension holder's retirement. Courts may award a percentage of the pension based on the marital portion of the service time. A QDRO or a similar order may be used to ensure that pension payments will be distributed correctly when the employee retires.

Creating the proper orders and following the correct steps when dividing these assets is essential to avoid unexpected tax obligations or early withdrawal penalties. Errors in drafting or executing orders can lead to significant financial losses. At A. Traub & Associates, our attorneys understand how to create and execute QDROs to ensure that funds can be allocated between spouses. We can also make sure transfers incident to divorce are performed correctly so that our clients' interests will be protected.

Protecting a Person's Financial Interests During Retirement Asset Division

The lawyers at A. Traub & Associates understand the long‑term implications of retirement asset division, and we provide guidance to help our clients achieve their goals and ensure that they will have the financial resources they need in the future. We help clients evaluate settlement proposals, understand the tax consequences of their decisions, and take the right steps to ensure that their retirement assets will be available to them when needed. We can coordinate with financial advisors to make sure our clients are fully prepared for whatever the future may bring.

Contact Our Glen Ellyn, Illinois Retirement Asset Division Lawyers

Retirement benefits are valuable assets, and careful planning is essential to ensure that they will be divided correctly during a divorce. The team at A. Traub & Associates can help clients assess and divide different types of assets while advocating for solutions that will meet their needs. To learn how we can help protect your financial interests and support your long‑term stability, contact our Glen Ellyn 401(k), IRA, and pension division attorneys at 630-426-0196 and set up a consultation.