According to the Pennsylvania General Assembly, courts take a number of factors into consideration when deciding how to divide marital property, including retirement benefits. As a result, people who are preparing to file for divorce in Scranton and throughout the state of Pennsylvania should prepare for property division and make sure they understand how their retirement accounts could be affected. Every year, many Americans separate from their spouse and some of them experience financial problems because they did not understand the laws or were unprepared.
On their website, the Internal Revenue Service addresses divorce and retirement plans. According to the IRS, a plan participant's former spouse could have entitlement to some of their retirement account. In some cases, such as the retirement or death of the participant, a former spouse could have instant access to their portion of the assets on the participant's account. Furthermore, a majority of retirement plans mandate that former spouses must submit a Qualified Domestic Relations Order (QDRO) before receiving any benefits. Courts are able to award some or all of the benefits to a participant's former spouse by issuing QDROs, which plans are obligated to honor.
Participants who have divorced from their spouse and are interested in changing beneficiaries on their retirement plan may want to contact their employer to complete a change of beneficiary form. By understanding how retirement plans could affect the division of property and recognizing how retirement benefits are impacted by divorce, couples who are separating can possibly avoid a great deal of stress.