Aside from the marital home, pensions and retirement assets are usually the biggest assets that need to be addressed in a divorce. If deemed to be marital in nature, pensions and retirement assets will be equitably distributed according to Florida law. The fact is, that if you are considering a Florida divorce or are about to go through a Florida divorce, you may be worried about what will happen to your retirement assets. Let’s take a look at what happens to them when they are subject to division in a divorce.
How are Pensions and Retirement Assets Divided in Divorce?
Under Florida’s equitable distribution law, all marital assets are subject to equitable distribution in a divorce. Non-marital assets, however, will remain the separate property of the owner’s spouse. Now, one of the complicated aspects of retirement assets is that they can be non-marital, they can be marital, and they can be partially marital and partially non-marital.
Marital assets are, generally speaking, those assets acquired throughout the marriage. This means that retirement assets acquired during the marriage will be subject to equitable distribution. This includes everything from 401ks, to IRAs, annuities, and pension plans. In some cases, however, a retirement account may have been established before the marriage and, thus, would likely be considered at least partially a separate asset. If funds were contributed and earned on the account during the marriage, however, that part would be considered marital in nature.
As you can see, retirement accounts are not likely to be a type of asset that is easy to determine what portion should be subject to division and what portion should remain separate. This is made even more difficult when you consider how challenging it can be to value a portion of a retirement account. To divide up a retirement account, it will likely need to be determined what the value of the account was on the date of the marriage. That date may have been many years ago. This is likely to require experts to determine the present fair market value of the portion of the retirement account that is a separate asset. Once this is decided, it can be set aside and not subject to division.
After the separate, premarital portion of the retirement asset is effectively carved out and is not considered for equitable distribution purposes, the court can move forward with dividing the marital assets. Pensions and other retirement plans, however, need to be distributed through a qualified domestic relations order. This order will be entered following the issuance of the final judgment. It is also important to note the potential tax consequences of dividing a retirement account. If a retirement account is rolled over from the owner spouse’s account to a retirement account in the other spouse’s name after the final judgment, then it will be considered a non-taxable distribution and there will be no penalties.
Florida Family Law Attorneys
Your retirement accounts and how they are handled in the divorce process can have powerful implications for your financial future. Make sure it is properly handled. The team at Bernal-Mora & Nickolaou is here to help. Contact us today.