Yes. All property and assets you accrued during your marriage are considered property of the marital estate. So, any accrued value to your retirement accounts occurring during the marriage would be considered marital property.
Retirement accounts, like 401(k)s, IRAs, pensions, and certain government plans, are designed to help you save for your future after you stop working. Many individuals don’t want to forfeit half their retirement savings to their spouse. In this article, the Tampa, FL, divorce lawyers at Westchase Law, P.A., will discuss retirement accounts in divorce and how they are handled.
Is the retirement account marital or separate property?
In a lot of cases, it’s both. For example, let’s say your retirement account accrued value before you got married. All the money accrued in the account belongs to you individually. However, the value that the account accrued during the marriage is property of the marital estate and hence, it is subject to distribution in Florida.
Dividing retirement accounts in Florida
The State of Florida divides marital assets (including retirement accounts) through a process known as equitable distribution. While there is a presumption that the estate should be divided 50/50, the State of Florida allows for exceptions in which a lower-earning spouse would be disadvantaged by an even split. This is known as equitable distribution. The marital estate is divided in a manner that is “fair” but not necessarily even.
When dividing the marital estate in a manner considered “fair”, a Florida judge might consider factors such as:
- The duration of the marriage
- The financial situation of the spouses
- Each spouse’s contribution to the marriage
- The debts and financial obligations of the spouses
Preventing tax penalties on retirement accounts
There is a way to divide retirement accounts without incurring tax penalties. But you will need a knowledgeable divorce attorney to oversee the process and avoid potential pitfalls.
One way to prevent early withdrawal penalties is through a Qualified Domestic Relations Order (QDRO), which allows for the division of a retirement account (like a 401(k) or pension) without triggering taxes for early withdrawal. While QDROs can’t divide IRAs, there are other methods of dividing an IRA that avoid penalties. To properly divide an IRA, the court will issue a transfer incident to divorce, which allows the tax-free transfer of IRA assets between spouses as part of the divorce settlement.
Dividing retirement accounts during a divorce can be quite complicated. The good news is that you don’t have to do it by yourself. Your Tampa, FL divorce lawyer will help you through the process.
Talk to a Tampa, FL Divorce Lawyer Today
The Tampa family lawyers at Westchase Law, P.A., represent the interests of those who are going through a divorce. We can help you with all aspects of your divorce, including equitable distribution of the marital estate, alimony, child custody, and child support. Call today to learn more.