In Pennsylvania and across the country, more people are choosing to divorce at an older age. The divorce rate for Americans over 50 has gone up by over 200 percent over the past 20 years and continues to rise. As the rate of these “gray divorces” increases, more senior ex-spouses are dealing with financial issues. Chief among these is the division of retirement plans.
While retirement funds are a major marital asset that could require division in a divorce at any age, they can be far more significant for spouses over 50. Each partner may need to begin an aggressive savings plan to rebuild their investment accounts. It is more expensive to support two households on the same amount of income and savings than one, so both parties may see lifestyle changes after the divorce.
When dividing retirement funds, it is critical to follow proper procedures. Failure to do so could lead to costly taxes and penalties that could be avoided by using the correct protocol. In order to divide a 401(k) or pension plan, a qualified domestic relations order (QDRO) is necessary. Directed to the plan administrator, this type of court order allows a plan to be divided to fund a separate account in the name of the other spouse in a divorce.
Different types of investment and retirement funds are handled differently during the property division process. A family law attorney can work with a divorcing spouse to advocate for his or her interests, protect assets and ensure that all legal procedures are followed precisely.