Retirement accounts, such as 401ks, that include money that was earned
during marriage are considered marital property in Florida, and can be
divided up or awarded all to one spouse during property division. Let’s
take a look at how your 401k may be affected by divorce.
Know Your Plan
Before anything else, start by discussing the terms of your 401k plan with
your plan administrator. What you can and can’t do with your 401k
is usually directed by the plan, with its own set of benefit provisions
and administrative rules. Some plans divide earnings by a percentage,
while others divide by shares. Some permit a distribution at the time
of divorce, while others require you to wait until retirement. Doing research
into your plan’s guidelines is pivotal.
If your 401k is to be divided, let’s now discuss how assets and property
are divided in Florida. Equitable distribution, which is the method used
in the majority of states, divides property in a way the judge hearing
the case believes is equitable or fair, but not necessarily equal. The
court will look at the contributions of each spouse and who may have gathered
debt and liabilities before making a decision. Below are a few options
you may have for dividing your 401k:
You keep all of your 401k in exchange for other assets: This option requires careful research and financial calculations, since
you’ll need to ensure that you and your ex-spouse remain on equal
financial footing in the long run.
You and your spouse split the 401k assets: If you want to split your 401k, you will need a Qualified Domestic Relations
Order (QDRO), a court order that creates the right for your ex-spouse
to receive a part of your plan account.
You liquidate your portion of the 401k and give you spouse a lump sum: If it is allowed, you may be able to get cash for your 401k, but this
is not a desirable option for either spouse because of the tax consequences.
It should only be considered if there is debt that needs to be dealt with
If you have questions about your 401k or division of property in your case,
Daytona Beach divorce attorneys at Stepniak & Park today.
Call (386) 868-4771 or contact us online
to speak with a representative.