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Considerations for dividing retirement accounts in divorce

People in Texas who are divorcing and who need to divide their retirement accounts must fill out the correct paperwork in order to avoid unnecessary taxes. For 401(k) and employer-sponsored plans, a Qualified Domestic Relations Order is necessary. For an IRA, a transfer incident must be filed to avoid taxes.

Tax implications on distribution are also reflected by the type of account that is being split. Because traditional IRAs, 401(b)s and 401(k)s are pre-tax contributions and Roth IRA contributions are made after taxes are paid, these vehicles will have different tax obligations. Individuals should take this into account as they are dividing assets.

Individuals should also take state laws into account. Texas is a community property state, but there may still be some scope for negotiation. If couples can negotiate division of assets, this may be cheaper and take less time than litigation.

In addition to dividing retirement accounts, separating couples may have other complex financial issues to work out. A lawyer might be able to assist in a high-asset divorce. One important aspect of dividing assets in a community property state is working out what constitutes marital property. A couple might also have a prenuptial agreement, but this can be challenged if one party is not satisfied with its contents. In addition to dividing property, couples who have children must also make decisions about child custody, visitation and support. As with other aspects of the divorce, it may be best if couples can come to an agreement on their own. However, this is not always possible, and when a child custody case or property division has to go to litigation, an attorney may be helpful in protecting and advising a client. A court will use the rubric of the child's best interests to decide custody.

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Bruce Turner

In addition to his law degree, Bruce Turner has a master's degree in tax law and is Board Certified in Commercial Real Estate Law by the Texas Board of Legal Specialization.

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Bruce Turner with Bennett, Weston LaJone & Turner, P.C.

Attorney Bruce Turner is located in Dallas and represents people and businesses throughout DFW and the Metroplex, including Denton, Carrollton, Lewisville, Flower Mound, Farmers Branch, Irving, Las Colinas, Corinth, Highland Village, The Colony, Plano, Frisco, Allen, McKinney, Mesquite, Grand Prairie, Garland and Grapevine as well as Collin County, Denton County and Dallas County in Texas.

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