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Splitting retirement accounts? Get help with the details

For some divorcing couples in Florida and around the country, figuring out how to divide retirement accounts is one of the toughest decisions to make.

If you don't do it right, it can result in financial losses in money going to taxes and penalties.

Splitting up your 401(k) and other retirement accounts is one of the most contentious parts of a divorce. A 2016 American Academy of Matrimonial Lawyers survey showed that the top three factors couples argue about most bitterly are alimony, pensions and retirement accounts and business interests.

The type of retirement account will determine how it is divided.

Workplace retirement plans: The only way to split up that plan is through qualified domestic relations order (QDRO). It is a separate document from the divorce agreement.

Before this document is submitted to the court, you and your attorney should review it to ensure the intent of the divorce agreement is reflected in the QDRO. If more than one retirement account is getting split, a separate order is required for each one.

Your attorney will get in touch with the plan's administrator to make sure that all of the necessary steps are taken to properly share 401(k) or pension plan monies. This step is crucial so that procedural mistakes aren't made that could wind up costing you thousands of dollars.

Once the QDRO has been settled, the company's plan administrator must approve it before funds can be transferred.

Individual retirement accounts (IRAs): A QDRO isn't needed to share the funds in an IRA, either traditional or Roth. However, it still must be done correctly so that no taxes or penalties are assessed.

The divorce decree will establish the division, including the timeline as well as the percentage to be transferred. A rollover account should be established for the transfer to take place. Again, it must be done properly or there is a risk of losing money to taxes and penalties.

You and your spouse have spent years earning the money that is in your retirement accounts. That's why it is so important to have an experienced Florida family law attorney to split up the accounts. You don't want to lose that hard-earned money.

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