Any couple that files for divorce will find the process challenging, especially when it comes to distributing their assets. Retirement savings held by federal employees are one of the most significant and difficult issues that must be handled in a divorce settlement.
Certain factors become highly significant when it comes to dividing assets after a divorce involving federal employees.
Determine your retirement plan
The first step is figuring out which kind of retirement plan you have—FERS (Federal Employees Retirement System) or CSRS (Civil Service Retirement System). Knowing which plan you come under before filing for divorce is crucial since one may provide greater benefits than the other depending on your particular circumstances.
Study partition and court orders
The next step would be familiarizing yourself with partition orders; court orders issued during the dissolution of marriage stating how Federal Workers Retirement plans should be fairly divided between each spouse post-divorce. In order for agreements on who gets what portion of pension funds from FERS/CSRS programs, both parties need an agreement signed off by the courts before money can be transferred or withdrawn from either party.
Familiarize yourself with offsetting or trading-off benefits
It’s also important to keep in mind that the court can only divide the retirement assets accrued during the period of marriage, and not any benefits received prior to this time. With this, it is possible for one spouse to receive a portion of their ex-spouse’s benefits from their FERS/CSRS account, which would be known as “offsetting” or “trading-off” benefits. This would mean one spouse will receive a greater percentage of their retirement plan in exchange for the other receiving less, this way each party gets an equal share of total assets post-divorce.
Get help from professionals
It is essential to seek the counsel of a divorce attorney who has experience with Federal Workers’ Retirement Plans in divorce procedures. They can assist you in ensuring that any agreement you and your spouse establish is just and equitable before it is completed. This way, both parties can rest easy knowing that their financial interests have been safeguarded in the event of a divorce.
By understanding what Federal Workers’ Retirement Plans in divorce are and how they can be divided in divorce proceedings, couples will ensure that their finances remain secure during this difficult time.
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With the help of an experienced financial advisor and divorce lawyer, both parties can help make sure all agreements are fair and equitable before finalizing them.
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The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Any opinions are those of Purposeful Wealth Advisors and not necessarily those of Raymond James. Raymond James does not provide tax or legal services.