Most income earners in a Texas divorce automatically assume that any contributions made to employee sponsored or even private retirement funds or pensions are theirs for the taking. Unfortunately, that is not the case. Any contributions made to any sort of retirement fund such as an IRA, 401(k), or pension during the course of a Texas marriage is subject to Texas’s marital distribution laws. Under Texas law, all property acquired during the course of a marriage is considered community property, meaning that it belongs to both parties equally.
Determining the value of retirement accounts in a divorce is a complex process, especially if the account holder had been contributing to the account prior to the union. Because of how complex the valuation process can be, it is important that you consult with a Dallas pension valuations attorney who is familiar with Texas property division, especially as it pertains to retirement funds. To speak with a lawyer today, reach out to the Udeshi Clark and Associates for a thorough case evaluation.
Working With a Dallas Pensions Valuation Attorney is in Your Best Interests
Because retirement plans are viewed by the Texas courts as earned income, they are subject to distribution during a divorce. The unfortunate thing about this is that most retirement accounts are subject to early withdrawal penalties, even if the decision to withdrawal is court ordered and not your own. Fortunately, there are legal measures you can take prior to withdrawing your savings that will protect you from those steep penalties.
At the Udeshi Clark and Associates, our Dallas pensions valuation lawyers routinely help clients deal with early pension distribution. In order to protect them from steep monetary penalties, however, we help them first draft a qualifying domestic relations order (QDRO). A QDRO allows a person to withdrawal the ordered amount without suffering from early withdrawal penalty fees.
Unfortunately, if your retirement account is not tax-deferred, there is not much you can do to avoid tax consequences for withdrawing funds before you retire.
Valuing Your Retirement Accounts
In Texas, a judge will consider the value of the retirement plan at the date of divorce, and not the actual monetary value of the retirement benefit. Additionally, the court is not required to distribute the plan evenly to both parties. It may consider factors such as the earning capacity of each spouse, unequal wealth, and parenting time, before allocating funds disproportionately to ensure that each spouse ends up with a fair amount of benefits.
Dealing with finances in divorce is up there with the top most contentious aspects of the process. At the Law Offices of Udeshi Clark & Associates, however, we deal with divorce on a daily basis, and we understand the intricacies of financial distribution, especially as it relates to pensions and retirement plans. If you are overwhelmed with the aspects of your divorce, and if you want to ensure that you receive a fair share of either your own or your spouse’s retirement plan, reach out to our pensions valuation attorneys today. Call (469) 914-5564, or schedule your consultation online.