Divorce is one of the most emotionally draining legal matters families face. In addition to the emotional complications that accompany the end of a marriage, it is also important to understand and address the tax consequences of dividing retirement funds.
Many people think that if property or accounts are in the other spouse's name, then they have no rights to it. That is not correct. Unless the property is addressed in a prenuptial agreement, it is usually considered marital property. For example, even though your retirement account may only be in your spouse's name, it will still be divided during the divorce.
During a divorce, there are several ways to divide property. One spouse may be offered the house in exchange for the full retirement funds. When I work with clients, I help them understand tax implications of dividing a 401k or IRA account.