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Retirement accounts and divorce in Florida: What to know

On Behalf of | Jul 5, 2024 | Property Division

One of the first things that likely come to couples’ minds when divorce is imminent is whether their retirement savings are protected. Many couples may not realize that retirement accounts, such as 401(k)s, IRAs and pensions, are usually considered marital assets. This simply means that they’re eligible for division like any other assets that the law perceives to belong to both partners.

However, Florida’s equitable distribution principle leans on a fair division of marital assets, which doesn’t necessarily translate into a 50/50 split in the event of litigation. The logistical process of determining the fair share that a spouse should receive from their partner’s retirement account can be overwhelming. The division of retirement accounts requires careful consideration to help ensure that neither partner is cheated out of their fair share of the funds.

Marital vs. non-marital assets

Even though retirement accounts are generally considered to be marital assets, therein may be non-marital funds. Suppose a spouse started to contribute to their retirement account before getting married; in that case, there’s a need to separate contributions made before marriage from those made during the marriage.

Essentially, the portion of the retirement account that was accumulated before marriage is considered a non-marital asset. Conversely, all contributions a spouse made during the marriage are considered marital and thus eligible for division during divorce. It’s crucial to remember that even if one spouse did not work or directly contribute to the retirement account, they may still be entitled to a portion of it.

Dividing marital retirement accounts

Once the marital portion of the retirement account is determined, the paying spouse can choose the method they prefer for asset division.

A key method most couples use to divide their retirement accounts in a divorce is a Qualified Domestic Relations Order (QDRO). This legal order enables the paying spouse to divide their retirement account with their spouse without incurring early withdrawal penalties or taxes.

The paying spouse can also choose to award their partner other marital assets in exchange for a share of the retirement funds to which the receiving spouse is entitled.

Dividing retirement accounts in a Florida divorce requires carefully tracing the contributions that were accumulated before and during a marriage. With the guidance of a reliable legal group, divorcing couples can fairly divide retirement accounts by utilizing the most suitable method ideal for their unique circumstances.