Divorcing couples in Georgia typically need to reasonably divide their resources. That process may entail negotiating an agreement or presenting evidence to a judge.
The most valuable property that people share will likely be subject to division. Retirement savings may reflect years of regular contributions to an account and someone’s primary source of stability after they leave the workforce. Many people worry about what may happen with their retirement savings in a Georgia divorce.
They may realize that they have to divide the account and worry that the timing of the divorce will diminish it even further. Are penalties and taxes inevitable when splitting retirement accounts?
There is a way to bypass early withdrawal penalties
The good news for those who worry about dividing their retirement savings in a Georgia divorce is that they may have less to lose than they realize. When the courts order the division of retirement savings, it is possible to split the account without triggering the standard taxes and penalties.
One of the lawyers can draft a qualified domestic relations order (QDRO). This document allows for the unpenalized division of an existing retirement account into two separate accounts. When properly drafted and recorded, a QDRO will eliminate the penalties and taxes that people usually need to pay if they withdraw money from retirement savings before they actually reach retirement age.
Although most people can anticipate losing at least a portion of their retirement accounts because they must share the funds with their spouses when they divorce, they don’t necessarily have to accept the penalties and taxes they would need to pay if they use those funds to remodel their home or buy a newer vehicle.
Having the right support when preparing for a Georgia divorce can help people minimize the financial consequences that the end of their marriage generates.