Can a Divorce Affect My Retirement Fund?

Protecting your retirement fund may not be a priority when considering or are in the middle of a divorce. Most likely, the emotional toll of the divorce on you and your family is probably at the top of your list. However, your financial health also matters, and this includes ensuring that your retirement savings, such as the money in your 401(k) or other retirement funds, are properly protected because a divorce can and will affect your retirement fund.

Retirement Plans and Property Distribution in a Florida Divorce

In Florida, any money that you and your spouse put into a retirement fund, such as an IRA or 401(k), will be considered marital property. This means that the court will divide the retirement funds the same way they split up marital property. It’s crucial to note that pension or retirement funds you and your spouse accrued while married will be considered marital property by the court. Any money either of you earned or deposited before getting married or after the divorce will be considered separate property, and separate property will not be subject to property division.

A Qualified Domestic Relations Order (QDRO) will be required to divide assets in the retirement fund. Once the judge signs the order, the distribution of retirement funds will be official. However, the plan administrators must accept the order before enforcing it. This applies to retirement plans under the Employee Retirement Income Security Act (ERISA), such as a 401(K), 403(b), and Thrift Savings Plan.

How to Protect Your Retirement Fund in a Florida Divorce

You may keep everything you earned and contributed before marrying your spouse, but everything you earned and deposited while married will be equitably divided between you and your spouse. Fortunately, you may not need to liquidate your retirement fund and pay any penalties. If your individual retirement accounts have equal (or equal enough) amounts, you can consider mutually agreeing to retain your individual plans without modifying anything.

But if one spouse has a more sizeable retirement fund, the spouses can either divide the account into two new accounts or liquidate it and then split the proceeds. But one spouse may not like the option of dividing the account into two since they won’t be able to contribute to and earn with the other account. Then again, everything can be negotiated during a divorce.

On the other hand, not all couples can easily come to an agreement about their divorce issues, especially if money is involved. In such cases, it’s best to discuss the situation with a Florida divorce attorney to ensure that you can come up with a fair agreement without loopholes that may backfire on you later.

Consult With an Experienced Florida Divorce Attorney Now

Dividing retirement accounts in a Florida divorce may be harder than dividing other assets since specific tax rules and regulations govern these funds. If you have any queries about splitting up your retirement funds during a divorce, don’t hesitate to get in touch with our Florida divorce attorney, Brian K. McMahon, P.A. To set up a complimentary case evaluation with our Florida divorce attorney, dial 561-658-1789 or reach us online.