In Oklahoma, retirement funds are considered to be a marital asset in a Muskogee divorce. That means that the court must divide all retirement funds equitably between the spouses during the divorce process.
In doing so, the court will take into consideration such things as the length of the marriage, the contributions that each spouse made to the marital community, and the needs of the spouses and children. The court may decide upon a 50/50 split, but it also may decide upon a different ratio depending on the circumstances.
Retirement funds are often the biggest asset of the marital community. As such, if you are getting a divorce and have retirement funds, you want to make sure that you understand the process of distribution and that you fully understand how the allocation is made and handled.
Mistakes, if made, can have severe tax ramifications. It is always best to consult with an experienced Muskogee divorce lawyer.
How Retirement Funds Are Handled
Typically, a Qualified Domestic Relations Order, or QDRO (pronounced as “Quadro”) is used in a Muskogee divorce to allocate retirement benefits to a spouse. It is an order of the court that tells the retirement account or benefit administrator that a specified portion of retirement benefits will now belong to the other spouse as part of the divorce settlement.
Normally, retirement benefits are not assignable during the beneficiary’s lifetime. QDROs carve out an exception to that rule, allowing part of the fund to be assigned to the receiving spouse.
Tax and Other Ramifications
If handled correctly, neither spouse will suffer adverse consequences. The QDRO acts like a directive allocating funds from a retirement vehicle to another person.
However, if that spouse takes the funds directly, or has them deposited into a regular bank account, there will be adverse tax ramifications to that individual. The taking acts as a withdrawal and the withdrawal will be subject to penalties.
If the funds are rolled over into another retirement vehicle such as an IRA, the payment of taxes will be delayed until withdrawal and there will be no penalties assessed.
There may be other issues that need to be resolved in negotiations regarding the QDRO allocation, For instance, if the assigning spouse had earned a portion of that money before marriage, that portion may be considered to be his or her separate property.
If the retirement funds were substantially earned outside of the marital community, the court may allocate a portion of these funds as separate property. In that case, the treatment and allocation of funds may be substantially different.
Because the financial decisions that you make now may have effects for years into the future, it is important that you fully understand the intricacies of the law. If you are contemplating a divorce or if you have questions regarding any part of the process, consult with an experienced Muskogee divorce attorney.
Low-cost Consultation: Muskogee Divorce Attorney
If you’re considering all of your options at the moment, call a Muskogee divorce attorney today at 918-913-0725, or toll-free at 1-888-447-7262 (Wirth Law).
Your first confidential consultation is low-cost, and there is never an obligation to hire an attorney.
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