How Could Divorce Affect My Retirement Savings?

Retirement savings represent years of hard work and careful planning. Whether you and your spouse contributed to 401(k)s, IRAs, or pensions, these funds are essential for financial security in your later years. But what happens to these savings if you go through a divorce?

When considering leaving a marriage, consult with an experienced Port St. Lucie family law attorney. Doing so is essential to fully comprehend your rights and options.

Are Retirement Accounts Considered Marital Property?

In the state of Florida, all marital assets, including retirement accounts, are subject to state equitable distribution requirements. This means that retirement savings accumulated during the marriage are typically divided fairly. It is important to understand that fair does not necessarily mean a 50-50 split.  Keep in mind, a 50-50 split is limited to the contributions and interest on those contributions to the retirement that are made during the course of the marriage, not necessarily the entire fund.

Each type of retirement account has different rules for division, and it is common for Florida residents to have a combination of accounts.

• 401(k)s and employer plans. If part or all of a 401(k) was earned during the marriage, the court may order a Qualified Domestic Relations Order (QDRO). This is a way to distribute some of the funds to the other spouse.
• Individual retirement accounts can also be split, but in these situations a QDRO is not required. Instead, a transfer is used for a tax-free division.
• Should one of the spouses have a pension, the non-earning spouse may be entitled to a share of future payments, depending on the length of the marriage and contributions made during that time.

Retirement asset division can be complex. Having a professional guide you through the process is key to avoiding mistakes. Errors may result in unfair settlements as well as unnecessary taxes and penalties.

Can We Agree to Keep Our Own Accounts?

Yes, it is possible for couples to negotiate their own terms when it comes to dividing retirement assets. Some spouses agree to trade other marital assets too, such as the family home, in exchange for keeping their full retirement savings. These decisions should be made carefully, long-term financial security considerations need to be reviewed.

Whether you and your spouse agree on divorce settlement terms or the situation is contentious and would benefit from mediation, a knowledgeable Port St. Lucie family law attorney can help. Divorce can feel overwhelming, but with the right legal guidance, you can safeguard your retirement savings and financial well-being.

Seasoned lawyers have the skills negotiate a fair settlement that includes the implementation of a QDRO. Legal support is also part of connecting with an accurate valuation of all accounts and avoiding tax issues that may create unexpected financial burdens.

Who holds the lion’s share of the retirement funds in your marriage? Whether your spouse has a pension or you have a 401k, your retirement is a lifetime investment. Connecting with a fair divorce agreement will protect your golden years as you move into the next chapter of your life. Bring your questions to the experienced legal team at Baginski, Brandt & Brandt to learn more about what is possible for you. Contact us today.