What Happens To My Retirement Accounts In A Florida Divorce?

Unless you signed a prenuptial agreement, your retirement accounts are considered marital property and thus, they’re subject to equitable distribution. That means that your spouse is entitled to some portion of your retirement accounts upon your divorce. In this article, the Orlando divorce lawyers at Greater Orlando Family Law will discuss the process of equitable distribution and how it relates to retirement accounts.

Marital versus separate property in Orlando, FL 

The portion of the retirement account that accrued value during the marriage is considered marital property. Meanwhile, the portion of the retirement account that accrued value before the marriage is considered separate property. This potentially makes for a complicated situation in which only some of the retirement is considered marital property for the purpose of equitable distribution. Contributions made before the marriage and those made after the divorce filing, are considered the separate property of one spouse.

To determine the marital portion, the date of employment, the date that benefits started, and the value of benefits at the time the marriage ended are all considerations that must be made before the retirement account can be divided.

The Florida courts attempt to establish a fair division of marital assets based on the length of the marriage, each spouse’s financial situation at the time of the divorce, and contributions (financial and non-financial) to the marriage, are all considerations that the courts must make. Retirement accounts are not guaranteed to be split 50/50.

Understanding the role of QDROs 

Dividing an employer-sponsored retirement plan (like a 401(k)) and pensions usually requires a special court order named a Qualified Domestic Relations Order (QDRO). This document instructs the plan’s administrator on how to divide the funds held within the account to the non-employee spouse by triggering either taxes or penalties. IRAs and Roth IRAs, on the other hand, are governed by a different set of rules and would not require a QDRO to divide.

QDROs allow the plan to be accessed and distribute funds without incurring any penalties, so long as the funds are rolled over into another qualified retirement account. If the funds are withdrawn as cash, they will be subject to taxes, but exempt from the 10% early withdrawal penalty if specified by the QDRO.

The QDRO should also address survivor benefits, especially with pensions, which ensure the non-employee spouse continues to receive payments after the account holder dies.

Government pensions, on the other hand, can be more complex. They may not legally be required to accept QDROs. In these cases, the spouses might negotiate a settlement that involves other assets or use alternative documents to ensure access to the funds.

Talk to an Orlando, FL, Divorce Lawyer Today 

Concerned about what’s going to happen to your retirement accounts after your divorce? Call the Orlando family lawyers at Greater Orlando Family Law today to schedule an appointment and learn more about how we can help.