On behalf of The Law Office of Gustavo E. Frances, P.A.
The division of retirement benefits in divorce is sometimes a difficult undertaking. In an equitable property distribution state, such as Florida, the assets acquired during the marriage are subject to equitable division by the family law court during a divorce. Equitable property division is based on the general idea of fairness. The statute sets forth certain considerations for a family court judge to consider when deciding what percentage of the marital assets shall be distributed to each party.
Some of the factors that must be considered are the long-term income potential of each spouse, the needs of any minor children, assets owned separately and several other facts tending to show the needs and financial capabilities of the parties. Retirement funds are generally treated as marital property. This means that such funds are subject to equitable distribution just like other assets acquired by either party during the marriage.
When the divorcing parties agree on an overall distribution of the marital property, a property settlement agreement is usually drawn up and executed by them. With respect to 401(k) employee retirement plans, a settlement on the division of the retirement proceeds will be accompanied by a Qualified Domestic Relations Order. The QDRO is a court order that specifies the respective ownership rights of each party in the 401(k) plan.
The QDRO eliminates any taxes or penalties that may have been applicable with respect to early distributions of the plan. Each retirement plan or pension fund will require a separate QDRO. The finalized document is sent to the administrator of the plan so that the distributions will be made in accordance with the terms specified by the court. This is the procedural framework in Florida and in other states that follow the laws of equitable property distribution in a divorce cases. However, in community property states, all marital assets are divided equally on a 50-50 basis.
When you need a Fort Lauderdale family attorney, you can contact us by calling 954-533-2756 for a free consultation.
Time, “Divorce: Who Gets Retirement Accounts?“, A. J. Smith, Nov. 16, 2015