A very common question that I often hear from my divorcing clients is, "Is my Spouse entitled to half of my 401K Plan, Pension Funds, or Retirement Account?"
There seems to be much confusion as to this area of divorce. Equitable Distribution in Florida allow for the division of property and assets acquired during marriage to be divided when the parties divorce. It comes as quite a surprise to my clients to learn that their soon-to-be former spouse is entitled to a portion up to one-half of any pension or retirement savings that was accrued during the marriage. In Florida, pension and retirement funds that accrue during the marriage are treated as marital property and are generally split equally between the parties. However, like with any rule, there are exceptions and modifications that may allow a client protect all or part of his/her retirement savings.
Florida Statute 61.076 Distribution of Retirement Plans Upon Dissolution of Marriage governs how the court should distribute these assets. The Statute holds that all vested and non-vested benefits, rights, and funds that accrue during the marriage are marital assets subject to equitable distribution during a divorce. This Statute applies to a plethora of Retirement/Pension plans including: 401(k), Pension Plans, Individual Retirement Account (IRA), Annuity, Deferred Retirement Option Program right (DROP), Thrift Savings Plans, and CSRS/FERS (Retirement plans through the Federal Government) that is acquired or accrues during the course of the marriage. It even applies to accrued sick-time that has monetary value if it was acquired during the marriage.
If the court determines a pension or retirement fund is a marital asset, they will issue a Qualified Domestic Relations Order (QDRO) that directs the plan administrator to divide the fund according to the Final Judgment of Dissolution of Marriage. We do not do QDRO's at our office but can direct clients to attorneys that specialize in this field of law. Once the court has determined that the pension, plan or fund is to be divided, the non-employee spouse is usually entitled to the same rights under the plan as the employee spouse, such as cost-of-living adjustments and early withdrawal options.
There are a few choices when it comes to how the money is to be received by the recipient-spouse, either that spouse is eligible to receive his or her share of the ex-spouse's benefits when the ex-spouse is entitled to receive them. Or that recipient-spouse might want to have it reduced to "present value" and cash out the money out of the plan/fund along with having to pay the penalties.
But not all retirements accounts/plans are considered a martial asset. Consider this: if a spouse has not contributed to their retirement account since the day they were married, the account will not be considered a marital asset and will retain its "pre-marital status." This also holds true for contributions made to a retirement account both before the marriage occurred and after it dissolved are the separate property of that spouse who made the contributions and are not considered marital property. The problem arises when monies are either co-mingled or contributed during marriage.
When determining what portion, if any, of a retirement account is not a marital asset, the courts will consider the length of any marital separation and whether marital "labor" or earnings were use to acquire the benefits. If a spouse maintains that all or part of his or her retirement account should not be considered marital property, that spouse will have the burden of proving when the retirement benefits accrued.
On the other hand, if a spouse is retired and dependent on a retirement account for income, the funds may be considered income-stream instead of an asset. In this situation, the retirement account will be considered for the purposes of determining an alimony claim or for computing child support, but will not be divided as marital property.
Retirement accounts and pension plans are a fairly complicated area in Divorce. To learn more about the process and what you are entitled to during your divorce, please visit our website or call the office to schedule your initial consultation. We employ a client based approach, which means that we are selective in the cases we take so that we can be available to our clients. We spend time with you to thoroughly understand the facts of your case, so that we can provide you with a comprehensive and realistic legal evaluation. Our process begins with a half-hour low-cost consultation, all of which is credited back to your account if we accept your case.
