One issue that might arise for some couples in Pennsylvania who are getting a divorce is that they need to divide a retirement account. This can be a complex process since these accounts often have rules that must be followed if there is a division because of divorce.
First, it is important to know the right terminology for these divisions. With an IRA, it is called a “transfer incident to divorce.” If it is a 401(k) or a similar plan, it is necessary to have a document called a “qualified domestic relations order.” It is important to get this right to avoid taxes or penalties. In some cases, people might decide it is easier to trade assets instead of dividing retirement accounts. For example, they might decide that one person will keep the retirement account while the other keeps the home. While each asset may look like it has the same value, this could be misleading since there could be different tax implications that change the value.
Some people may also have a sentimental attachment to a retirement account that can make the idea of having to divide it difficult. For example, they may feel loyalty to the company they work for, or the account may have represented the idea of security to them. These emotions can affect the process of property division.
It is not unusual for some elements of the divorce to carry emotional baggage that can make negotiation difficult. One of the places where this is the most difficult is with issues concerning child custody, but people may also struggle with giving up the family home or other assets. It may help a person to talk to an attorney beforehand about where compromises may be made. This can help the person stay focused during the process of negotiation.