Division of martial property and assets accumulated during the course of the marriage is part of any divorce in
Florida. Retirement accounts and pensions are also included in the division
However, it is imperative to understand that the entire value of a specific
retirement plan or pension won’t be subject to marital division.
Instead, only the amount which was earned or accumulated during the course
of the marriage is considered. Courts apply a variety of methods to determine
the amount of retirement plan or pension which was earned throughout the marriage.
The following factors used by the courts to divide marital property include:
- Duration of marriage
- Each spouse’s overall economic circumstances
- Each spouse’s debts and liabilities
- Each spouse’s contributions to the marriage
Preparation of a Qualified Domestic Relations Order (QDRO) is required
in order to divide retirement benefits. QDRO establishes an ex-spouse’s
legal right to receive a specific percentage of a qualifying retirements
plan’s balance or benefit payments and directs a retirement plan’s
administrator to make the according payments. If the QDRO is prepared
incorrectly or not prepared at all, there will be severe tax consequences.
The following are two types of retirement accounts:
- Defined Benefit Plan (Pension) – This type of retirement count guarantees
the account holder a specific sum of money upon retirement, which can
be paid out either on a periodic basis or one lump sum.
- Defined-Contribution Plan (401k) – Allows a person to save money
for retirement in a tax-deferred account. Over time, the account holder
(as well as the employer on some occasions) makes contributions to the plan.
Both types of retirement accounts are divided differently. With a defined
benefit plan, the ex-spouse is able to receive a lump sum. With a defined-contribution
plan, the account balance is typically multiplied by a percentage of vesting
for the account upon being divided.
For more information about equitable distribution,
contact Anne E. Raduns, PA and schedule an
initial consultation today.