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Adjusting Retirement Plans After a Wisconsin Divorce
By Like all other types of marital property, retirement accounts are included in the equal division of assets in a Wisconsin divorce. This often means that those who expected to rely on their spouse’s contributions, or at least combined contributions from both spouses, to fund their retirement will face the difficult prospect of adjusting their retirement plans to account for their new circumstances. However, it is possible to recover from the effects of your divorce with some smart decision-making and strategic planning.
Dividing Retirement Accounts Correctly
One of the best ways to prevent your divorce from having an outsize effect on your retirement is to think carefully about how you will divide the assets in your retirement accounts. If you and your spouse are negotiating the division of property, you may be able to reach an agreement in which each spouse retains the full amount of any retirement account in his or her name, while offsetting differences in value with other assets as necessary.
If you need to split a retirement account in order to divide marital assets equally, you should be sure to obtain the necessary legal documents to prevent taxes and early withdrawal penalties from significantly reducing retirement assets for both parties. Dividing a pension or 401(k) typically requires a Qualified Domestic Relations Order (QDRO), while dividing an IRA requires that you follow a process known as a transfer incident to divorce.
Other Strategies for Adjusting Your Retirement Plans
If you find that the outcome of your divorce has significantly reduced your retirement savings, there are a few other options that can help you get your retirement back on track. These include:
- Finding additional sources of income. If you relied on your spouse for your retirement plan, it may be important to further your education or look for opportunities to advance in your career to increase your personal income that you can contribute to your retirement.
- Delaying your retirement date. While it may be hard to push off retirement for longer than you expected, waiting a few more years can allow you to build up the savings you lost in your divorce and live the kind of life you want when you are able to retire.
- Increasing your retirement contributions. You may also be able to make up for the impact of your divorce by increasing the percentage of your monthly pay that you contribute to your retirement accounts. With this option, you may be able to keep your intended retirement date within reach.
Contact a Waukesha County Divorce Lawyer
At Gimbel, Reilly, Guerin & Brown, LLP, our attorneys can help you protect your retirement interests throughout the divorce process and keep your goals in sight. Contact us today at 414-271-1440 for a free consultation with an experienced Milwaukee family law attorney.
Sources:
https://docs.legis.wisconsin.gov/statutes/statutes/767/vii
https://www.wisbar.org/newspublications/wisconsinlawyer/pages/article.aspx?Volume=85&Issue=6&ArticleID=2443
