Dividing retirement accounts in an Illinois divorce requires some foresight. Parties in a divorce will sometimes approach property division with fairness in mind. They enter into the process saying that they will divide everything in half, fair and square. When you and your spouse make decisions regarding the division of retirement assets, paying attention to details matters or you may end up with unintended results.
For example, if you and your spouse decide to split a 401k evenly, you may look at a $100,000 balance in your account and decide that your wife or husband will get $50,000. Although, at the time of the agreement this amount reflected a 50/50 split, volatility in the market might mean $50,000 is either less than half or more than half the amount left in the 401K after adjusting the account for earnings and losses from the day you and your spouse agreed on the figure until the day it actually went into effect. Unwittingly agreeing to a specific dollar amount can result in a lopsided division of assets when it comes to investment accounts such as 401k’s, IRA’s and the like.
Another issue to consider when dividing retirement assets is what tax treatment they will receive in the future. If you have a 401K and a Roth IRA both valued at $100,000 at the time of your divorce, you may decide that it seems fair for each spouse to take one of these since, on the surface, they appear equal. However, in the future, the Roth IRA can be taken tax free while the 401K is subject to taxes, making it worth less in the division of marital property.
As they say, “the devil is in the details” and this could not be more true when dividing marital property, particularly your largest assets such as retirement accounts and your home. When you are divorcing, securing your financial future is important for you and your family and a knowledgeable and experienced attorney can help you avoid costly missteps. If you are considering divorce, contact the Libertyville, Illinois family Law Offices of Schlesinger & Strauss LLC for help with division of marital property, issues related to a small business in a divorce, child support and custody, spousal maintenance and other family law matters.
