Experienced Miami Divorce Lawyers Protect Your Right to Retirement Accounts
Skilled management of crucial issues that effect your financial future
At Rafool, LLC, our Miami divorce lawyers understand your apprehension if you are going through a divorce later in life. There can be a great deal of anxiety about your retirement. Will you be able to retire when you had planned to? Or will you have to work several more years to have the financial security you’d expected? It’s not just the additional expense that comes with two people living singly rather than as a couple. There’s also concern over what the divorce will mean for your current retirement accounts. We’ve handled a great number of “gray divorces” in which we’ve had to fight for our clients’ 401(k), IRA or pension rights. You can trust our capable litigators to advocate strongly on your behalf to protect your right to security in your golden years.
How do the divorce courts in Florida handle retirement savings?
Florida is an equitable distribution state, which means that divorce courts divide marital assets and debts in a manner that is fair, but not necessarily equal. Generally speaking, retirement savings earned and accumulated during the marriage are a marital asset. Therefore, your retirement savings are subject to equitable distribution. This process requires the court to decide how much of the savings is marital and how much of the marital amount each spouse should get.
If you have a defined contribution plan, such as a 401(k), the process is fairly clear-cut. It’s more complicated with a defined benefit plan, which may include benefits that have not yet vested. You might need the testimony of a financial expert to explain how much of the savings is principal and how much is growth that accrued during the marriage. The court then uses several factors to determine the proper portion each spouse should receive. Important factors include:
- The length of the marriage
- The contribution of each spouse to the accumulation of the savings, including the value of services performed in the home
- The standard of living during the marriage
- The ability of the dependent spouse to earn a living and prepare for retirement after the divorce
Once the court has determined the proper share for each spouse, the question becomes how to best divide the fund between them. Our Miami divorce lawyers can help you understand how the court is likely to view your case.
Different approaches to different retirement plans
Not all retirement plans are created equal, and the court does not take the same approach to dividing all of them. One of the main tools a court has for IRS tax-qualified plans, like your 401(k), 403(b) or 457, is a qualified domestic relations order (QDRO). With a QDRO, the court orders the plan’s administrator to create two accounts, one for each spouse, based on the court’s equitable distribution findings. This division takes place without any tax penalty.
It is important to note that QDROs only apply to plans covered by the Employee Retirement Income Security Act (ERISA). You do not need a QDRO to divide an IRA or a Roth IRA account. You can accomplish a division with a direct trustee-to-trustee transfer, also without a tax penalty.
A QDRO is also not designed to divide state and federal civil service retirement plans, but it is sometimes possible to get approval from a plan administrator on the basis of a QDRO. As for military retirement benefits, The Uniformed Services Former Spouses Protection Act is the federal statute that allows state courts to treat military pensions as property rather than income. That means that the pensions are subject to equitable distribution. The Defense Finance and Accounting Service is the agency that oversees payment of military retirement benefits, so the court’s decree must be submitted through that channel.
The wording of a QDRO must be precise to properly accomplish the division of assets. Mistakes in explaining how the assets are to be shared can cause you to receive less than you deserve, which is why you should retain an experienced attorney who knows how QDROs work. We will advocate strongly for your rights to achieve a settlement or court order that safeguards your financial security.
Contact our Miami divorce lawyers for answers about retirement benefit division
The closer you are to retirement, the more financial uncertainty a divorce can cause. The experienced divorce lawyers at Rafool, LLC are skilled in reaching settlements and litigating cases related to retirement benefits. To learn more, call us at (305) 567-9400 or contact our Miami office online to schedule an initial consultation.