If you live in Indiana and are thinking about getting a divorce, then you may wonder what happens to your retirement accounts. The short answer is that they belong to both you and your spouse. You may be ordered to divide them down the middle along with your other assets. There are at least four ways that you can obtain this equal split.
The easiest way to keep your 401(k) or other retirement benefits is to trade assets until you both get an equal amount. For example, if your retirement account is worth $1.5 million and so is your home, you could give your spouse the house and keep your retirement benefits. If you find it difficult to negotiate with your spouse, a family law attorney may be able to help.
Divide the retirement benefit
It is possible to divide retirement benefits so that each of you gets money regularly once the person owning the retirement benefit is old enough to retire. Each divided account requires a particular court order specifying the dollar amount or percent that each spouse gets. The receiving spouse then has the option of rolling their share over into another account, waiting until the person earning the account retires or cashing out the account. Consider working with an accountant or knowledgeable tax expert as each of these choices has essential tax considerations.
Liquidate the retirement fund
You can agree with your spouse to liquidate the retirement fund, but most of it may go to pay taxes. Therefore, this is often the least preferable option available.
Roll over the money
If the person earning the retirement fund is 59.5 years old, you can roll over the money into two individual retirement accounts, one for each spouse. This option allows you to decide on your own how you want to invest or spend your share of the money.
You are entitled to half of a retirement account when you get a divorce. An attorney may be able to help you and your spouse find the best possible solution.