The Law Office of Gustavo E. Frances, P.A.
Call Toll-Free At
1-866-435-4172
Office Hours, M-F 8:30 - 5:00
After Hour Calls
954-297-6546
Evening, Holiday & Weekend

A QDRO dictates division of 401(k) retirement plans in divorce

The division of retirement benefits in a divorce is sometimes a difficult undertaking. In an equitable property distribution state, such as Florida, the assets acquired during the marriage are subject to equitable division by the family law court during a divorce. Equitable property division is based on the general idea of fairness. The statute sets forth certain considerations for a family court judge to consider when deciding what percentage of the marital assets shall be distributed to each party.

Some of the factors that must be considered are the long-term income potential of each spouse, the needs of any minor children, assets owned separately and several other facts tending to show the needs and financial capabilities of the parties. Retirement funds are generally treated as marital property. This means that such funds are subject to equitable distribution just like other assets acquired by either party during the marriage.

When the divorcing parties agree on an overall distribution of the marital property, a property settlement agreement is usually drawn up and executed by them. With respect to 401(k) employee retirement plans, a settlement on the division of the retirement proceeds will be accompanied by a Qualified Domestic Relations Order. The QDRO is a court order that specifies the respective ownership rights of each party in the 401(k) plan.

The QDRO eliminates any taxes or penalties that may have been applicable with respect to early distributions of the plan. Each retirement plan or pension fund will require a separate QDRO. The finalized document is sent to the administrator of the plan so that the distributions will be made in accordance with the terms specified by the court. This is the procedural framework in Florida and in other states that follow the laws of equitable property distribution in a divorce case. However, in community property states, all marital assets are divided equally on a 50-50 basis.

Source: Time, "Divorce: Who Gets Retirement Accounts?", A. J. Smith, Nov. 16, 2015

No Comments

Leave a comment
Comment Information

How Can We Help You?

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

The Law Office of Gustavo E. Frances, P.A.
200 S.E. 6th Street, Suite 402
Fort Lauderdale, FL 33301-3424

Toll Free: 866-435-4172
Phone: 954-703-4207
MAP & DIRECTIONS