Unlike courtroom movie scenes, dividing marital assets following a divorce can be complicated. Marital assets consist of all property accumulated during the marriage and acquired through labor, services and/or efforts of both people. It can include separate and joint bank accounts, pension accounts, investments, and real property. It is not just houses, cars, and other kinds of personal property that get divided in divorce, but retirement benefits and funds as well.

When you file for divorce in Florida, a legal formula is followed in dividing retirement accounts called equitable distribution. During the process, the state court looks at your various accounts such as pension plans, annuity accounts, retirement plans, deferred compensation, and profit-sharing plans.

It is important to note that only those retirement benefits, 401K plans, IRAs, and Keoghs that you accrued during the course of your marriage are going to be subjected to equitable distribution. Those acquired before the marriage aren’t considered marital assets.

Equitable Distribution in Florida

In general, the courts will divide pensions and retirement accounts between the two parties according to a number of circumstances. Factors that can affect division are the length of your marriage, debts and liabilities, and overall economic circumstances. Yours and your ex-spouses’ contribution to the marriage are considered, which also includes care given to the children. The same is true for improvements made in your non-marital or marital assets. If there was any interruption in either party’s personal career or educational opportunity, the courts will also take this into account.

While equitable distribution is followed in divorce settlements in Florida, this does not literally mean that everything that you owned as couple will be divided 50-50. Instead, it implies that the courts are expected to make the division just and fair, but not always equal. You can learn more about equitable distribution here.

Retirement Benefits

Traditionally, the retirement accounts that you can open and fund yourself include IRA and Roth IRA, 401k plans, and annuities. The most common source of a retirement account is through employment via a pension, so even if only one of you has worked during the marriage, all marital property, including any retirement plan, will be divided for both ex-spouses. The same benefits are going to be valued and then allocated as separate or marital property by the courts through a Domestic Relations Order (DRO) or Qualified Domestic Relations Order (QDRO).

Domestic Relations Order (DRO) and Qualified Domestic Relations Order (QDRO)
For one party to get a share of an ex-spouse’s retirement benefits, a court needs to issue a DRO or QDRO. Here, a specific language will be provided detailing how the benefits are to be divided. This special document will outline how funds are going to be transferred from the one holding the plan to the party who will be receiving a share.
At this point, it is important to have an experienced attorney assist you as the QDRO drafting can be a potential source of conflict due. There are many common mistakes that may be made that your lawyer can help you to avoid. Huge problems can result in collecting your retirement proceeds, and may leave limited options for recovery, if this paperwork is not completed correctly.

Employer Based Retirement Plans

There are two categories to retirement accounts that are available through your employers known as defined benefit plans and defined contribution plans. The kind of retirement plan will determine which benefits you and your ex-spouse should be entitled to following a divorce.

Defined Benefit Plan

A defined benefit plan is more popularly known as a pension and an employer is usually the one who pays for the full cost of this plan. Upon retirement, it guarantees receipt of a specified sum of money. The money that the account holder will receive can either be paid in lump sum or in periodic installments.
In this case, an ex-spouse can choose to receive the payments in lump sum and cash it out. A portion of the present value of the retirement account at the time of the divorce can already be received and then spent or re-invested. On the other hand, he or she can wait for retirement to be able to receive the payments.

Defined-Contribution Plan

A defined contribution plan is aptly called because it is a contribution made by the account holder himself or by both the member and the employer. Unlike a defined benefit plan, it doesn’t pay you specific retirement benefits and instead allows you to save up retirement money through a tax-deferred account.

Most often than not, the employer would match the amount that the member is contributing to the fund. The final size of the retirement fund is determined through the return of investment on their contributions.

The main advantage of this plan is its portability as the contributed funds can be rolled over to the next employer should the member get a new job. Your defined contribution plans include 401Ks, Individual Retirement Accounts (IRAs), 403Bs, Keoghs, and stock savings plans.

Most of the time, the account balance in a defined contribution plan is multiplied to the percentage of vesting in the account and this is then divided between the ex-spouses.

Divorce, as it is, is not an easy situation for two people who desire to move forward and live separate lives. If you are going through a divorce and need help with ensuring that your retirement benefits are properly divided, Seff & Capizzi Law Group can help. There are crucial steps that must be followed to make this transition smooth and worry-free for you.

If you need assistance with your divorce, please call us at (954) 920-9220. We have over 40 years of experience and offer a free consultation. Click here for more information about our family law practice and how Seff & Capizzi can help.