Long Island Divorce & Retirement Accounts — Who Gets Paid?
Divorce can impact you financially, including your retirement accounts. For most people on Long Island, planning for retirement is largely guesswork. Although you’re putting part of your income in savings accounts and investments to provide for your future expenses when you no longer can or want to work, there are a lot of things that are up in the air. For example, you don’t know how inflation will affect the value of your retirement funds and how much cost of living will increase on Long Island. Even so, you save because it’s important to try to plan ahead as much as you can.
When planning for retirement, not many people consider the impact of a divorce on your retirement nest egg, especially if you aren’t even married yet. However, divorce matters a lot when you discover that retirement accounts are subject to New York property division laws. Divorce can significantly impact you financially, both when it comes to retirement accounts and in other ways. If your divorce is contentious, the costs associated with it can skyrocket. Here’s what you need to know about divorces and retirement accounts on Long Island.
Marital Property or Not Marital Property?
Most of the time, retirement accounts are considered marital property under New York law and are subject to division. However, there may be a few cases where some or all of the funds in a retirement account may not be considered marital property. If you had the account before you were married, the court may determine that only the funds and interest accumulated during your marriage would be subject to division — the funds and interest you had prior to your marriage would remain your own. Another situation where your retirement accounts may not be divisible is if you had a prenuptial agreement in place that specifies it as separate property.
How Are Retirement Accounts That Are Marital Property Divided?
Retirement funds considered marital property are subject to the same property division laws as any other asset. New York, like most other states, has fair and equitable distribution laws, meaning that although the division may not be exactly equal, it will be impartial and fair to both parties. Long Island courts take into account a number of factors when determining who gets what in a divorce, including:
- You and your ex-spouse’s assets and income prior to marriage
- You and your ex-spouse’s assets and income during marriage
- How long you were married
- If you and your ex-spouse share children
- You and your ex-spouse’s expected assets and income as you begin to live independent from one another
The above is not a comprehensive list of all things courts will consider, however, it gives a general idea of what goes into making a decision regarding retirement funds in a Long Island divorce.
Will You Get Penalized for Withdrawing Your Retirement Funds Early?
If you get a divorce and are required to split your retirement accounts, you may believe that you’ll be subject to early withdrawal penalties because technically, you are withdrawing the funds before your actual retirement. However, if you have a court order that requires you to withdraw your retirement funds to divide them according to the final judgment issued in your divorce, you will not incur early withdrawal or tax penalties. Since divorce and divvying up retirement funds is commonplace, you should only need to fill out a few forms to have a new account opened in your ex-spouse’s name so their portion of the funds can simply be rolled over.
Questions About Divorce & Retirement Funds? Contact Our Long Island Divorce Law Firm Today
Our Long Island divorce law firm has handled a number of divorces involving retirement accounts. Whether you want to protect your retirement accounts or get your fair share of the funds, we can provide you with zealous, compassionate, and aggressive legal representation. Our commitment to you is to offer the affordable protection of your rights and best interests in your Long Island divorce case. Contact us today to learn more about how to proceed with a divorce if you have retirement accounts and what your next step should be. Call 631-923-1910 now for a free consultation.
For more information about Property Division in your divorce, visit our Complete Guide to Dividing Property in Divorce.
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