Lombard Retirement Accounts Divorce Attorneys
Lawyers for Division of Retirement, 401(k) Accounts, and Pensions in DuPage County
Property and asset division is one of the most complicated aspects of a divorce. The situation becomes even more complex when retirement funds, 401(k) accounts, and pensions are involved. Many individuals mistakenly believe they are able to keep full ownership of their personal retirement accounts after a divorce. However, this is very often not the case. Because of the complications with retirement accounts and divorce, it is essential to be represented by a family law attorney with particular experience in this area of the law.
The divorce and family law team at Mevorah & Giglio Law Offices has successfully represented clients in the Chicago area and throughout Illinois for over 40 years. Our award-winning attorneys have extensive experience with even the most highly complex divorces involving issues such as debt division, bankruptcy, family-owned businesses, tax consequences, and many others. Our attorneys are honest, compassionate, responsive and down to earth, and we aggressively advocate for the interests of each client we serve. We offer free consultations, extended evening and weekend hours, and we promptly respond to all client inquiries so you always know what is happening with your case.
Division of Retirement, 401(k) Accounts, and Pensions in Illinois
When a marriage is dissolved, all property that was acquired during the marriage is subject to fair and equitable division, including personal retirement accounts. The situation becomes more complicated if one or both spouses brought existing 401(k) accounts or IRAs into the marriage, and these accounts grew in value while the couple was married. In such cases, it is important to accurately determine what percentage of the account is marital property and what percentage is non-marital. Only marital property is subject to equitable division during divorce.
Pensions benefits are also considered marital assets if they are earned by a spouse during the marriage. However, since these benefits are not paid out until the spouse's retirement, it can be difficult to determine their true value at the time of divorce. Typically, a person will be able to receive half of the marital portion of their spouse's pension benefits, with the marital portion being the amount of the pension that was earned while the couple was married. For example, if a spouse worked in a pension-eligible position for a total of 40 years, and they were married for 10 of those years, the marital portion of the pension benefits would be 25%, and their ex-spouse would be eligible to receive half of that amount, or 12.5% of the benefits which are paid out following retirement.
Depending on the circumstances of the case, couples may choose to divide retirement accounts or pension benefits, or one spouse may retain ownership of these assets, while the other spouse retains ownership of other assets of similar value.
Retirement Account Division and Tax Consequences
In most cases, early withdrawal of funds from a retirement account will incur a tax penalty. To avoid such penalties, a Qualified Domestic Relations Order (QDRO) must be prepared. This will allow for the distribution of funds from one spouse to the other, and these funds can typically be rolled over into another retirement account. A QDRO is also required when distributing the benefits earned from one spouse's pension to their former partner, and a Qualified Illinois Domestic Relations Order (QILDRO) is required for public employee pensions. QDROs and QILDROs are highly technical documents that must be worded very carefully to stay in compliance with all federal and state laws and ensure there are no tax problems down the road.
During divorces involving IRAs, 401(k) accounts, or pensions, it is important to have experienced counsel in your corner so you can emerge from the divorce in the best possible financial position. At Mevorah & Giglio Law Offices, we understand the stress and financial worries divorcing couples face, and we work hard to make the legal process as smooth and seamless as possible. Our lawyers are skilled litigators inside the courtroom and strong negotiators outside of court, and we put our experience to work to bring your case toward a positive outcome. Contact our office today at 630-932-9100630-932-9100 for a free consultation with one of our skilled divorce attorneys.