People in Georgia who get a divorce when they are close to retirement age might be worried about its effect on their retirement, but even younger people may find their retirement savings endangered by divorce. In most divorces, a spouse is entitled to at least a portion of retirement savings.
Some people may choose to keep a retirement account and allow the spouse to take other assets of a similar value. If the person has a pension plan or a 401(k), this means it is necessary to prepare a complex document called a qualified domestic relations order. This document is needed to divide both of these types of pensions. If there is an IRA, it is not necessary. However, when making a decision about how to divide retirement savings, people should keep in mind the limitations associated with some of these assets. For example, withdrawals from an IRA before the age of 59.5 will incur penalties.
Social Security benefits from a spouse’s income may provide a significant retirement cushion for some people. The marriage must have lasted for at least 10 years. A person may want to draw on a spouse’s earnings, at 50% of the benefit, if it is higher than their own full benefits. This does not affect the earnings of the spouse.
Other complex investments and assets may feature in a high-asset divorce. Some people may have art, jewelry or other collections that must be appraised before they can be included in the divorce settlement. These appraisals can delay the divorce, particularly if each person has an appraiser and they come up with different figures. Selling a home or a business could also delay a divorce. When selling significant assets as part of a divorce, people should be aware of capital gains tax or any other tax implications.