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What to pay attention to in a gray divorce

After 20 or more years of marriage, some couples realize they remain unfulfilled and thus embark on the process of getting divorced. In these situations, which often occur among those who are 50 years and older, funding requirements may become more challenging. A few tips may help with preparing for the financial aspect of a later-in-life divorce, or gray divorce, in New Jersey.

First, any money that is in a retirement plan or account will have to be divided as part of the divorce proceeding. These include a 401(k) plan, a 403(b) plan or an individual retirement account, or IRA. A qualified domestic relations order, also known as a QDRO, is necessary to facilitate the splitting of retirement funds in non-IRA retirement plans.

QDROs are not necessary for transferring IRAs. However, IRA contributors would benefit from not transferring money out of their accounts until their divorces have been finalized. If they transfer money out too early, the IRS will consider this to be a taxable distribution.

When dealing with QDROs in particular, having a qualified attorney's help in New Jersey is paramount, as a mistake can cause a QDRO to be effective -- an issue that is very time consuming and expensive to address. An attorney can also offer guidance on other retirement accounts and assets to ensure that a spouse gets his or her fair share of these assets. The attorney's ultimate goal is to achieve a personally favorable settlement for the spouse and to ensure that his or her rights are upheld during all stages of the divorce proceeding.

Source:, "A costly "gray divorce" can upend your retirement plans", Tim Sobolewski, June 21, 2017

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