Can I Get Some of My Soon-to-Be Ex-Spouse’s Retirement Account Money?

Tue, Sep 15, 2015

General Legal Issues

4969425461_8eff9840bf_bDivorce is a big mess financially and otherwise, of course. Many unfair things take place on both sides. No one is ever fully happy with the arrangement, and it’s not a lot of fun.

Nevertheless, there are laws for a reason. The reason isn’t always fair to both sides, but divorce laws in Florida were created somewhere along the line to make the couple split assets somewhat equally. Luckily, there is some give and take about what equal means, and there is a reasonable ability to create deals amongst the parties that evens things out in a way that suits both parties—equally or at least fairly and appropriately. Mediation can be a friend in these situations. But of course, this is all often clouded by the emotional realities of divorce.

Splitting up assets in a divorce in Florida is done using something called equitable distribution. This means that the marital assets are looked at as a whole and divvied up in a way that lets couples divide the assets as equally as possible. Retirement is one of those assets. However, there are some specific rules on retirement.

For instance, you are not usually allowed to take the retirement money that your spouse earned prior to marrying, but sometimes you might be able to get future retirement earnings. However, you are capable of getting close to half of the retirement money that was earned while you were married. This is usually something that can be negotiated through equitable distribution of other assets. You are also capable of saying that each of you keeps your own retirement. All of these decisions depend on the circumstances of the couple. A couple with a lot of real estate acquired during the marriage might make a deal that one person keeps their retirement and then gives the other real estate to make up for it. Or maybe the retirement is used to replace debts that the couple owes.

If you do decide to divvy up retirements, it is often done with something called a Qualified Domestic Relations Rollover (QDRR) or a Transfer Incident to Divorce (TID). A Qualified Domestic Relations Rollover is used for a 401k or 403b. The one who owes the other a certain amount would have money transferred from their account to their spouse’s account or a new account could be created for the funds. An IRA is split up via a Transfer Incident to Divorce. It is important that the funds be transferred correctly so that unfortunate tax or penalty consequences don’t occur.

This link to Investopedia is quite helpful in explaining the situation in more detail.

In some ways, divvying up retirement is easier than some divisions during a divorce because financial arrangements like the QDRR and TID have been created. In addition, retirement can be a good gambling chip when needed—as it can be used to bargain for a different type of asset that might be desired.

Of course, every divorce situation is unique. That is why it is important to consult with a qualified divorce attorney. It is important to also consult other financial professionals should you feel that your divorce situation warrants it. Tax attorneys, accountants, business attorneys, and real estate attorneys might be good professionals to consult. Don’t leave these important financial decisions in the hands of just anyone. While some divorce attorneys know the ins and outs, many don’t. I hope that your divorce attorney will be wise enough to tell you when you need further advice than they can offer.

Attorney Christopher D. Smith, Sr. is designated a Board Certified Consumer Bankruptcy Lawyer by the American Board of Certification.  SmithLaw is located in Lakewood Ranch, Florida.  Attorney Smith concentrates on bankruptcy, civil litigation, probate, estate planning, and elder exploitation cases in the Sarasota and Bradenton area.  Call 941-202-2222 to learn more.  SmithLaw offers free consultations in certain areas, including consumer bankruptcy, probate, and personal injury matters.

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