While many spouses may fight over who should get to keep the marital home in the belief that this is their most valuable asset, Austin divorce lawyers can explain that this often is not the case. Instead, retirement plans are often the most valuable asset.
One of the considerations that divorcing couples may have is whether the account holder should cash out the retirement plan. However, one drawback to cashing out a retirement plan is that early retirement penalties may apply. When evaluating the potential value of a retirement plan, these penalties should first be deducted from the value.
Austin divorce lawyers are familiar with a variety of retirement products, including annuities. These financial investments provide a fixed sum of income to a person for a fixed period of time with a certain amount of interest. However, annuities can be difficult to evaluate. Some evaluators may say that the annuity is equal to the present value of future anticipated benefit plans. However, the annuity’s value quote by a program administrator usually includes the amount that he or she charges as part of the quote that is provided to the account holder. In comparison to other types of retirement products, the account holder would not actually be responsible for such costs. Therefore, the quote derived at from an annuity can be significantly less than the present value of the asset by using a different interest rate.
Retirement plans are often comprised of two distinct contributions. Employees contribute to the plans. In fact, some employers such as governmental agencies may require employees to contribute to their pension or retirement plan as part of their employment contract. The other source of contribution is from the employer. These contributions add up together, along with earnings that the plan achieves. When vesting is complete, the employee can withdraw the funds that are part of this plan whenever he or she no longer works for the employer. Evaluating this type of product can be difficult because the cash-out value can be much less than the present value of anticipated future benefits. This is even more true for employees who still have a number of years before they are eligible for employment. Austin divorce lawyers may discuss options to evaluate such plans.