How Does Divorce Impact My Retirement Savings?
Your financial future is one of the many aspects of your life that can be affected by a divorce. For many individuals, retirement savings represent years of hard work and careful planning, but during a Florida divorce, these savings may be subject to division. Having a conversation with a West Palm Beach family attorney about proactive steps can help you navigate this process with confidence.
How Are Retirement Funds Divided?
In Florida, which follows equitable distribution laws, retirement accounts are typically considered marital property. This is especially true if the funds were accumulated during the marriage. Then, they are subject to division during a divorce, regardless of whose name is on the account.
Some common types of retirement savings that may be divided:
- 401(k)s
- IRAs, both traditional and Roth
- Pension plans
- Military retirement benefits
- Deferred compensation plans
Dividing retirement accounts can be complicated and often requires careful calculations. Courts aim to achieve a fair, but not necessarily equal, distribution of assets. Influencing these determinations will be the length of the marriage, each spouse’s financial contributions to the marriage, and the economic circumstances of each individual.
For certain accounts, like 401(k)s and pensions, a Qualified Domestic Relations Order (QDRO) may be required. A QDRO ensures the funds are distributed in compliance with tax laws and plan requirements, avoiding penalties. IRAs, on the other hand, do not require a QDRO but must follow specific transfer rules to prevent tax consequences.
When it comes to funds or accounts accumulated before the marriage, they may be considered non-marital property and remain with the original owner. Yet if there was a large growth in value during the course of the marriage, these gains may be subject to division, depending on the circumstances.
Is There a Way for Me to Protect My Retirement Savings?
If you’re concerned about your retirement savings, gather statements for all retirement accounts, including those from the beginning of the marriage. This will help establish which portion of the savings is marital property and which is separate.
Also, recognize that dividing retirement accounts can trigger taxes and penalties if not handled correctly. Working with a financial advisor or tax professional can help you minimize the financial impact. Keeping these impacts in mind, you may be able to negotiate a settlement that makes sense for you. Some find it helpful to negotiate for other assets, such as letting go of the family home in exchange for a greater share of a retirement savings.
An experienced West Palm Beach family attorney will listen closely to the details of your situation and share with you ways to ensure your financial future remains secure. They can also guide you through the division process, including preparing any necessary legal documents, such as QDROs.
Are you worried about the possibility of distributing your retirement funds? If you’re facing a divorce, reach out to the experienced family lawyers at Bruce S. Rosenwater & Associates. Professionals are available to walk you through every aspect of the process, from dividing assets to securing your financial future. Schedule your confidential consultation today.
