Dividing Retirement Assets in a Kansas Divorce
If you are married, the retirement savings you have worked long and hard to build are not yours alone. In a Kansas divorce, they are subject to being divided with your spouse through the process known as equitable distribution.
Kansas law requires the division of property in a divorce to be fair but not necessarily equal. Kansas is an “all property” state, so equitable distribution will be applied to all assets owned by you and your spouse, not just those acquired during the marriage. This means that retirement funds earned by either spouse prior to marriage are subject to being split up. Retirement assets include a variety of accounts, such as pension plans, IRAs, 401(k) and 403(b) plans.
Many divorcing couples in Kansas prefer to work towards an agreeable property division instead of allowing the court to make the decision for them. The court will allow a couple to arrive at an agreement that will specify each spouse’s share of assets, including retirement accounts. If the spouses can’t agree, the court will impose a distribution plan.
The court will decide on the division of retirement assets by considering the facts of the case and the financial situation of each spouse. This is intended to give the divorcing couple a fair division of property instead of simply splitting it down the middle as is done in community property states. The court will use a list of factors to determine what happens to the property, such as the age of the spouses, length of the marriage, earning capacities of each spouse, property owned, how the property was acquired and other factors to make the division as fair as possible.
Dividing retirement assets in a divorce can be complex due to valuation issues and to special rules that govern when splitting pensions. In addition, there are tax consequences to be considered, since early termination of an IRA or 401(k) can make the funds taxable. A qualified domestic relations order, or QDRO, is usually issued by the court to transfer funds from these accounts. A QDRO permits a former spouse to acquire a designated amount of their spouse’s retirement assets without tax liability. It also can create a right for an alternate payee to receive a predetermined portion of a retirement plan.
Retirement accounts are often one of the largest investments a person owns. You have been contributing to your retirement for most of your working career and are rightly concerned about the proper handling of your hard-earned funds. It’s important to seek the assistance of a Kansas divorce attorney with experience handling cases involving equitable distribution of these valuable assets.
Peggs Wheeler, LC in Wichita, Kansas helps individuals going through a divorce achieve a fair distribution of their property holdings, including retirement assets. Call us at 316-512-7853 or contact us online to schedule a free consultation.