Retirement Plans

Some people hold an emotional attachment to their portfolio and not want to liquidate it, others would rather have their cash in hand immediately, and ask their spouses to liquidate the retirement plans in the property settlement.

Any transfer between spouses pursuant to a divorce would be tax-free as long as the funds went from one retirement account to another. If however they decide to cash out early, watch out for the taxes and penalties that might be assessed. There are some ways to withdraw pension funds without paying the early withdrawal penalties, if the documents are filed properly in a QDRO. In a financial mediation, always reduce the value of the retirement account by the potential tax bill that would be due in the future.