Is My Retirement Account Marital Property?
Our clients work hard to prepare for retirement, but divorce can upend even the most carefully laid plans. Unfortunately, retirement accounts often qualify as marital property. This means that a judge could order that some or all of the account be given to your spouse as part of a divorce.
At the office of Caroline Olson P.A., we have worked with many clients to keep their retirement plans on track. Often, it is possible to preserve someone’s entire 401(k) or pension, but we need to look closely at the particulars.
Many Different Accounts Could Qualify as Marital
Our clients generally have one of two types of retirement accounts:
- Defined benefit plan. This type of account pays out a retirement benefit based on certain factors, such as the client’s salary when they retired and the number of years they worked for an employer. A defined benefit pension is an example of this type of retirement account.
- Defined contribution plan. Increasingly, our clients have this type of retirement account. No benefits are guaranteed. Instead, the worker or employer (or both) makes regular contributions, and the employee decides how to invest. The employee receives whatever is in the account when they retire. Common examples include 401(k), IRAs, Roth IRAs, and similar accounts.
Interestingly, Social Security benefits are not subject to division in Florida, so those are not considered. But under Fla. Stat. §61.075, most retirement accounts are.
Identifying How Much of an Account is Marital
As a rule, a retirement account is marital if it was opened while you were married. All contributions made during marriage will count as contributions of marital property up to the date that someone files for divorce or the couple enters into a separation agreement.
Some people have retirement accounts that predate their marriage, but they continue to make contributions while married. For example, Emily might have opened an IRA while single and made a $3,000 contribution each year. Three years later, she marries and continues to make her annual contribution for each year of marriage.
In this example, some of the value in Emily’s IRA will probably be marital and some will be her separate property. This is often the case. An experienced Jupiter divorce lawyer can carefully analyze an account to determine how much of its value might be subject to equitable distribution.
Keeping Retirement Accounts in One Piece
A judge might order that you transfer some of an account to your spouse as part of a divorce. However, with proper planning, we can often keep the account in one piece. For example, our clients could give their spouse an offsetting amount of other marital property, such as more equity in the family home or money in a savings account.
If you must divide the account, then your attorney should draft the appropriate legal document, which is often a Qualified Domestic Relations Order, or QDRO. Without this document, the plan administrator might refuse to make any division, or you could owe penalties and taxes.
Speak with Our Jupiter Equitable Distribution Attorney Today
Divorce should not delay retirement. At the office of Caroline Olson, P.A., our Jupiter equitable distribution lawyers will do everything we can to ensure that you exit a marriage on sound financial footing. Contact us today to schedule a consultation.