While many people are concerned about who gets the family home in a divorce, retirement plans are often among the largest assets in a divorce. As such, they require careful attention during divorce proceedings to ensure you receive a fair outcome that protects your long-term interests.
In Colorado, understanding and dividing these plans fairly requires specialized knowledge, which pension evaluators and certified divorce financial analysts (CDFAs) provide, helping achieve fair settlements through expert advice on asset distribution and tax law.
Why Retirement Assets Are So Complex in Divorce
Some of the reasons why retirement assets are so complex in a Colorado divorce are:
Not All Retirement Accounts Are Equal
Many types of retirement accounts exist, each with its own structure, rules, and tax implications. Some of the most common types of retirement vehicles include:
- 401(k)s: 401(k)s are a common type of employer-sponsored retirement plan, often with a company match equal to a percentage of the employee’s contributions.
- IRAs: Individual Retirement Accounts are opened by individual investors. They have lower contribution limits than 401(k)s but wider selections of investments.
- Pensions: Pensions provide a guaranteed, regular income to employees after they retire, with the amount being based on their salary and years of service.
- Government retirement systems: Government workers may have access to retirement programs that are similar to 401(k)s or receive a pension, depending on what their employer offers.
Vesting schedules, future payouts, and tax implications complicate valuations of these financial assets.
Only the Marital Portion Counts
Colorado considers only the portion earned during the marriage to be divisible. Identifying this marital share is crucial and not always straightforward.
What a Pension or Retirement Evaluator Does in Colorado
Given the complexity of the retirement vehicles listed above, it’s essential in complex divorce cases to work with a pension or retirement evaluator. This type of evaluator:
Provides Accurate Valuation
These financial experts use actuarial methods to estimate the current and future value of pensions and retirement accounts. They account for interest rates, inflation, and the time value of money to determine an accurate value of the separate and marital portions of the retirement funds.
Determines the Marital Share
These financial professionals dissect years of service and contributions made during the marriage vs. before or after. This careful analysis ensures only the marital portion is divided, protecting pre-marital and post-divorce earnings.
Helps Navigate Colorado Law
These professionals often have familiarity with state-specific legal standards and equitable distribution principles. They also ensure compliance with rules for Qualified Domestic Relations Orders (QDROs) if needed.
Benefits of Involving an Experienced Colorado Divorce Attorney
Some of the benefits of involving this type of expert in your Colorado divorce case include the following:
Avoids Costly Mistakes
Hiring a professional can help avoid costly mistakes. Misvaluing a pension could lead to a lopsided or unfair division that can harm you for years to come. These mistakes are hard to fix once the divorce is finalized.
Supports Equitable Settlements
These financial experts help lawyers and the court craft a fair division based on solid financial evidence. They offer clarity when one spouse will receive future payments and the other needs immediate offset. They can also advise you on how to complete transfers without incurring unnecessary tax penalties.
Protects Your Financial Future
These financial professionals show how retirement division impacts your long-term financial health. A CDFA can help project post-divorce income needs, especially for those nearing retirement so you can make informed decisions about how to divide these accounts.
When You Should Hire a Pension Evaluator in Colorado
You should consider hiring a pension evaluator in a high-asset divorce where pensions or retirement accounts are substantial. Another situation when you may need a pension evaluator is when one spouse is a government or union employee with a defined benefit plan. If there’s disagreement or confusion about what portion of the plan is marital, you should consider using the services of this type of financial expert. The long-term cost savings of hiring this type of professional when you need them far outweigh the upfront costs of hiring them for your case.
Contact Stahly Miner LLC Today for Guidance with Your Divorce
Divorce is not just emotional, it’s financial.
A Colorado pension or retirement plan evaluator can make the difference between a fair split and lasting regret.
Protect your future by getting expert help during property division.
An experienced complex property division lawyer from Stahly Miner LLC can help connect you with the right professionals and guide you through the divorce process. Learn more by calling (303) 797-2900.