Retirement Benefits Are Considered Marital Property in a Florida Divorce
In a divorce, your marital property is divided between you and your former spouse. This includes houses, cars, and even your retirement benefits. Often, retirement benefits are one of the largest assets that are divided, and the division at the time of your divorce affects the benefit amount you will receive at the time of your retirement. Unless you entered into a prenuptial agreement before your marriage, retirement benefits will be divided with your former spouse at the time of your divorce.
Florida Is an Equitable Distribution State
In Florida, courts try to make fair and just property divisions. This doesn’t mean that assets are divided 50/50 between each spouse, but rather that the court examines different factors in your marriage to determine an equitable distribution of those assets.
When it comes to retirement benefits, only the amount you or your spouse contributed during the course of your marriage will be considered in the division. Anything you contributed before you were married and after your divorce will not be considered when retirement benefits are divided. The court determines the amount that was contributed during the marriage.
Division Methods Differ for Different Retirement Plans
Retirement benefits can include 401Ks, IRAs, Roth IRAs, military retirement, and government pensions, among others. They can include plans that you or your former spouse contributed to individually or that your, or your former spouse’s, employer contributed to. Different methods are employed to determine how each of these retirement accounts are divided.
Defined-benefit plans are divided by giving you or your former spouse a percentage of the payout of the plan. You can either receive this as a lump sum of the plan’s value at the time of divorce or in monthly installments at the time of retirement.
Defined-contribution plans are divided by determining the number of years an employee worked compared to the number of years required for the plan to be fully vested. If the employee worked fewer years than required to be fully vested, the division amount is less.
Government pensions are governed by different laws, and sometimes the non-employee former spouse is not entitled to receive a division of the employee’s benefits. If equitable division is to be maintained, the non-employee former spouse may be entitled to receive some other asset that is of equal value to that of the government pension.
Military retirement divisions depend on the length of marriage and how many years the former spouse served in the military while married. The rules for military division also take into account the service member’s rank and years of service at the time of the divorce. The non-military former spouse cannot receive more than 50% of the military benefits.
To divide a company-sponsored retirement plan, a qualified domestic relations order needs to be drafted to ensure you or your former spouse receives benefits to which you are legally entitled. The specifics of the division and the divorce agreement need to be spelled out in the QDRO. Individual retirement accounts don’t require a QDRO, but they can be tricky because there can be serious tax penalties if the division is not done properly. You may want the help of a divorce attorney to ensure forms are completed correctly to avoid mistakes.
Getting the Help of Our Boca Raton Divorce Attorneys
Because the requirements differ for different types of retirement plans, it’s important that you consult with a divorce attorney when your marital property is being divided. With over 75 years of combined legal experience, our Boca Raton divorce attorneys at Schuttler, Greenberg & Mullins, LLC can help with a smooth division of your marital property. Our award-winning attorneys provide you with the personalized attention you need to ease the stresses involved in a divorce.For help with your divorce-related matters, contact us at Schuttler, Greenberg & Mullins, LLC to schedule a consultation. We can be reached at (561) 336-6082.