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For those Florida residents who are fortunate enough to have set money aside for retirement, handling the division of those assets could be a primary focus when their marriage comes to an end. Retirement investments are a complex topic within a divorce and require a careful and considered approach. Understanding the ramifications of various options is essential to a positive outcome.

For example, couples who have a defined benefit plan should know that there is an advantage to splitting the plan at the time of divorce and having each spouse take his or her half and invest it into a new plan. Otherwise, the spouse who is the technical “owner” of the plan will be the one who will decide when benefits will begin. That could cause financial strife for the other party, who might want to retire earlier or later than his or her former partner.

Another example involves a couple who need to pull money from a retirement investment to complete some other portion of the property division process, such as buying out the other party’s share in the family home. For those who have a 401(k), there is an option for a one-time withdrawal during a divorce that will not incur the customary 10 percent early withdrawal penalty. An IRA does not offer a similar option, and pulling funds from an IRA will lead to an overall reduction in the value of that asset, which must be taken into consideration during the negotiation process.

When it comes to handling retirement issues during a Florida divorce, the best way to proceed is under the guidance of a trusted family law attorney. An attorney who focuses on this type of practice will be familiar with the rules and stipulations of various types of retirement plans. Once he or she is familiar with a client’s investments and long-term goals, it becomes possible to pursue a settlement that is in line with those projections.

Source: U.S. News & World Report, “12 Steps to Protect Your Money in Divorce“, Christine Giordano, Aug. 15, 2016