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Divorce after 50, retirement accounts and your future

If you are divorcing later in life, chances are, you have many kinds of assets to divide, including a home, your vehicles, perhaps a boat, valuable collections and, last but not least, retirement accounts.

You must divide your IRA, 401(k) and your pension. You want to be sure these accounts are divided properly because different rules apply to different accounts.

The QDRO explained

When you divide the funds from a 401(k), you will need a Qualified Domestic Relations Order, the purpose of which is to properly divide this kind of retirement account with your ex-spouse or your dependents. It confirms each party‚Äôs right to a portion of the proceeds and eliminates penalties or tax considerations if he or she should take early distribution. Also, if you have a pension or an individual retirement account, you may need a transfer incident, a tax-free method of moving funds.

Equitable distribution

Illinois is an equitable distribution state, which means that instead of splitting your assets in half, the judge will divide them in a fair and equitable fashion. The judge will consider various factors, including your age, your current financial position, the length of your marriage and your earning potential.

Looking ahead

The more assets you have, the more complex property division will be and the more time it will take. The emotional impact of ending a long marriage is significant, and the future can look somewhat scary. You are no longer a 30-something going through a divorce, and you no longer have the time to bounce back from whatever financial error you may make. Be sure you understand everything about the property division phase of your divorce before you sign the settlement agreement. Educate yourself on the disposition of retirement accounts as it pertains to a divorce. Explore your legal options, and make sure the decisions you make now will provide you with future financial security.

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