One of the reasons many New Hampshire residents take advantage of their employment retirement accounts is to keep them from spending the money since the tax ramifications of early withdrawals are steep. When times are good, people just leave these accounts alone and let them grow. However, during a divorce, couples may face the division of these accounts and may wonder how they will avoid paying the tax penalties associated with the distribution.
The good news is that New Hampshire residents who are dividing their retirement accounts in a divorce can use a qualified domestic relations order to avoid incurring the tax penalties. The plan participant will more than likely need to begin by talking to the plan administrator. Each plan has its own rules and may require certain language in the order to be valid. Some plans have their own forms and they could provide useful information, but it may not be the best idea to use them as they are.
The law has requirements as well. The QDRO must contain certain information regarding the alternative payee, which is the spouse receiving a portion of the funds, the percentage or specific amount given and more. Without this information, the order may not be valid. The plan participant could then end up owing those tax penalties after all.
It would be a good idea to make sure this document is properly drafted in order to keep that from happening. Going through a divorce can be costly enough without inadvertently losing additional financial footing due to a mistake. For this reason and many more, it only makes sense to work with an experienced family law attorney who can help ensure that everything goes smoothly.
