Is my Retirement Account a Marital Asset in Florida

Divorce is a challenging and often complex process—especially if you or your spouse have retirement savings. If you’re wondering whether your 401(k), IRA, or pension could be considered a marital asset in Florida, you’re not alone.

Many people don’t realize that even if their retirement account is in their name, part of it may still be distributed to their spouse during a divorce. Because Florida’s equitable distribution laws can dramatically impact your financial future, it’s vital to understand how your retirement savings will be treated.

If you’re planning for divorce, knowing what’s yours—and what isn’t—could save you time, money, and unnecessary stress. Keep reading to learn more about how your retirement accounts may be divided and what you can do to safeguard your assets.

The Basics of Retirement Accounts

Retirement accounts, like 401(k)s, IRAs, pensions, and similar savings plans, are designed to help you save for your future after you stop working. In most states, including Florida, when these accounts are funded during a marriage, they are generally considered marital property, meaning they may be divided with your ex-spouse in a divorce. This includes both the contributions made during the marriage and any growth in value that occurred over that time.

The Division of Retirement Accounts 

In Florida, marital assets, including retirement accounts, are divided through a process called equitable distribution. You might think this means that everything is split 50/50 between the two of you. However, despite the name, this process divides marital property in a manner that is “fair” but not necessarily equal. 

When deciding the fair division of retirement assets during a Florida divorce, a judge might consider things like:

  • The duration of the marriage
  • The financial situation of both spouses
  • Each spouse’s contributions during the marriage
  • The debts and financial obligations of each spouse

If the retirement account was started prior to the marriage, Florida law says the amount accumulated before marriage is separate property, meaning it remains the property of the individual who created it. As a result, that money in the retirement account will not be considered when the equitable distribution is calculated. 

However, those who’ve continued to add money to the retirement account throughout the marriage might not keep the entirety of those funds. So, while the funds accumulated before the marriage are separate property, the increase in value or contributions made during the marriage would usually be divided between both spouses, depending on the specifics of the case. 

Preventing Tax Penalties

The mishandling of retirement accounts has the potential to result in tax penalties. The last thing you want to do is to rush to cash out retirement accounts to cover divorce-related expenses. Before you do anything, consult a divorce attorney or tax professional to avoid unnecessary and undesirable taxes and penalties.

One way to prevent early withdrawal penalties is through a Qualified Domestic Relations Order (QDRO). A QDRO provides for the division of certain retirement accounts—such as 401(k)s and pensions—without triggering early withdrawal taxes. While QDROs don’t apply to IRAs, there are other legal methods to divide those accounts properly to avoid unwanted and costly penalties. 

To divide an IRA properly, the court will typically issue a transfer incident to divorce, which allows for a tax-free transfer of IRA assets between spouses as part of the divorce settlement.

An experienced Orlando divorce attorney can help guide you through these processes, ensuring your retirement savings are protected.

Learn More About Retirement Accounts and Divorce With an Orlando Family Law Attorney

Navigating the division of retirement accounts during a divorce can be migraine-inducing. The good news is–you don’t have to do it alone. The experienced Orlando family law attorneys with McMichen, Cinami & Demps can help you understand your rights and protect your financial future. Contact us today to schedule a consultation.

Contact Our Divorce Law Firm in Orlando, FL

Contact the experienced Orlando divorce lawyers at McMichen, Cinami & Demps today for legal assistance. Contact our Orlando, FL office at (407) 898-2161 to schedule a free consultation.

McMichen, Cinami & Demps – Orlando Office
1500 E Concord St
Orlando, FL 32803