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Saving Retirement Funds When Getting Divorced


Divorce retirement fundsResidents of New York can be at risk of multiple losses in the face of a divorce. Some of the losses are sadly unavoidable, but others can be prevented or minimized. Retirement accounts are one form of asset that is commonly considered part of the marital estate and therefore divided in divorce proceedings.

For many people, especially those who get divorced near, at or even after the age of retirement, this can be a very upsetting reality. Forbes confirms that the number of people who get divorced in their 50s or beyond in the United States has grown in recent decades, based upon data from the National Center for Family and Marriage Research.



The biggest risk when splitting retirement accounts between two former spouses is the potential for high taxes or penalties being imposed. This happens primarily when proper procedures are not followed and tax and financial entities view transactions as a means of obtaining funds when not otherwise allowed rather than as part of property division stipulations.

The following are some ways to prevent this from happening:

  • Always reinvest
    A California woman provides the best reason for this recommendation. A Forbes story highlights one wife’s choice to simply keep money received from her former husband’s 401K account. Had the woman opted to reinvest the money, she could have avoided a rather unpleasant and unwanted tax deficiency.
  • File a QDRO
    A Qualified Domestic Relations Order, as noted by both, the Tampa Bay Times and Fox Business, can be a great way of ensuring that all entities understand that specific financial transactions are pursuant to divorce decrees, thereby preventing the assessment of taxes or penalties. The QDRO is a relatively simple document that can have far-reaching benefits.
  • Choose other assets
    While 401K funds are commonly split by divorcing spouses, this may not always provide the best long-term investment. Roth IRAs are funded with already-taxed dollars, which could make them a better option to some spouses. People should consider letting partners keep 401k accounts intact in exchange for receiving these funds.

These are just some of the ways that people can keep the maximum amount of money for their future retired lives even when getting divorced.


Divorces are by nature complex and touch every part of people’s lives. This makes the involvement of legal professionals truly the best way to make sure all issues are properly addressed and negative ramifications are avoided.