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What happens to retirement accounts in a divorce?

by | Aug 6, 2017 | blog

Florida couples preparing for a divorce know they can expect to divide the assets they gathered throughout their marriage. Retirement accounts number among the larger assets, so it is worth taking a closer look at how Florida law addresses their division.

Florida is an equitable division state, so all property, including retirement plans, gets divided according to what would be fair. While in some cases this may indeed mean splitting everything equally, in other circumstances a different approach would better promote fairness.

Does the entire plan get divided?

The entirety of a plan or pension may not necessarily count as marital property. The courts will only divide the part of it earned or accrued during the marriage.

What does a QDRO do?

To split up part of an account, a Qualfied Domestic Relations Order is necessary. This court order confirms the beneficiary’s ex-spouse’s right to receive a certain portion of benefits or balance. It also tells the plan’s administrator to make these payments. When drawing up a QDRO, it is important to adhere closely to technical requirements. Mistakes can have a serious effect on taxes, among other issues.

Are there special requirements for military retirement plans?

Some particular types of retirement benefits may operate under additional specific rules. If one spouse serves in the military, his or her ex may be entitled to a share of military retirement benefits. However, a spouse who did not serve may not receive more than half of the retired service member’s benefits. For the benefits to be considered marital property, the Defense Finance and Accounting Act requires at least 10 years of service and a marriage lasting at least 10 years.

Do government agencies have to accept QDROs?

If you worked for federal, state, city or municipal government entities, your pension plan may be subject to some special laws as well. Unlike non-government pension plan administrators, government retirement account administrators may not necessarily be bound by a QDRO. Florida state and county governments do accept QDROs; however, many municipalities do not. Therefore, even if the court assigns part of the plan’s value to the ex-spouse, the ex-spouse may not be able to access it. In such cases, one solution may be to assess the value of the plan and give the ex-spouse a different asset of equivalent value.

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