Albany Attorneys Handling Retirement Issues
When dividing a retirement asset in a divorce, it is important to consider the value of the asset now and what it will be worth at the time of retirement. These values can be radically different depending on when the asset was created. Additionally, retirement assets need to be analyzed from a tax perspective in order to determine the true value of the asset, net of tax liabilities.
At Maxwell & Van Ryn, LLP, attorney Paul Van Ryn, LLP has been admitted to the U.S. Tax Court for more than 30 years. We have an in-depth understanding of the complex laws surrounding the division of retirement assets. Our Albany lawyers help clients with retirement and divorce issues throughout upstate New York.
Dividing Retirement Assets and Handling Tax Issues
Defined contribution plans and defined benefit plans each receive different treatment when dividing those assets and evaluating the tax implications. A defined contribution plan is one that is defined by the contributions you make to it. For example, a 401(k) is a defined contribution plan.
A defined benefit plan, on the other hand, is defined by the benefit you receive from it. This is what is known as a “true pension.” This includes retirement plans covering postal workers, railroad workers, military and federal government employees.
Each of these plans is defined by the IRS and there are particular tax issues that arise with each one. For example, many defined contribution plans involve stock or mutual fund investments and an employee may start contributing to this plan early on in his or her career. When it comes time for retirement, there may be a capital gain on the stock or a loss and this could raise tax issues. Additionally, well-known defined benefit plans, including the NYS and local retirement system, NYS teachers’ retirement system and the SUNY retirement system, all have individual and unique choices that need to be analyzed from a tax perspective.
Additionally, there are different procedures for dividing each type of retirement asset in a divorce. For example, federal government pensions do not require a domestic relations order but they can be divided according to the same principles. Local and state retirement plans can be divided up by simple domestic relations orders. Other plans require the creation of a qualified domestic relations order.
Contact Our Pension Rights Lawyers Serving Schenectady
We can guide you through the process of valuing and dividing retirement assets. Call 518-475-0016 or contact us online today to schedule a consultation to discuss retirement issues in your divorce. Our law office is located in the Albany suburb of Delmar in upstate New York. We offer free parking.