Retirement accounts are one of the most frequently valued assets in a divorce. With so much potential money to be distributed, it makes sense that the laws would be very particular regarding division. Each state handles retirement account division their own way, so always make sure you’re reading information that is correct and pertinent for your state. Here’s more about how retirement accounts are handled during divorce in Texas.
Dividing the Retirement Account
When you file for divorce, your retirement accounts will be listed as part of your assets. The judge will review your case and, in most cases, the judge will decide that the amount of money saved in the retirement account during the marriage should be divided 50/50. Keep in mind, this doesn’t necessarily mean the entire retirement account will be split 50/50, just the money that was saved during your marriage.
The Retirement Account Division Process
Many people believe that the judge rules how the retirement account should be divided, and that’s the end of it. Nothing could be further from the truth. Before you begin your divorce proceedings, it’s important to understand the process for dividing your retirement accounts.
- The judge decides how the retirement account will be divided. This decision is also called a court order or.
- After the judge submits his or her judgement, you need to file an additional form called the Qualified Domestic Relations Order (QDRO). This is the official court order and directive to the plan administrator about how the retirement account should be divided.
- Take the time to ensure all the information in your QDRO is correct before you file it. Any mistakes or inaccuracies could result in the plan administrator rejecting your form. This would mean additional effort and time to correct and resubmit the document.
- Once the plan administrator approves the QDRO, a new retirement account will be created for the non-employee spouse.
When the funds are divided, it is not considered to be an early, taxable withdrawal. This division is completely free of tax penalties.
Who Needs a QDRO?
In most cases, a QDRO is necessary. You will always need a QDRO if you are dividing:
- A 401k or 403b
- Thrifty savings plans
- Profit-sharing plans
- Employee stock ownership plans
- Tax-sheltered annuities
In order to be certain you file the correct paperwork in a timely manner, consult a qualified family law attorney.
Do You Need Help Dividing Your Retirement Accounts?
Whether you are just starting the divorce process or have gotten your judgment and need to file your QDRO, Bobby Barina can help. Our experienced professionals will be able to answer your questions and guide you through this sometimes tricky process. To find out what we can do for you, contact us today.