Going through a divorce can undoubtedly be an incredibly emotional time, as you may be navigating the loss of one of the most important relationships in your life. However, it’s critical to understand that divorce is inherently a complex legal and financial matter, so you must understand the important considerations you’ll be required to make. One such choice is whether or not you need a QDRO. If you’re unsure what this is or the function it serves, you’ll want to keep reading. The following blog explores what you should know about these difficult matters, including the importance of working with Tampa property division lawyers to help you through these complex legal times.
How Does a QDRO Work?
A Qualified Domestic Relations Order (QDRO) is a document utilized by couples going through a divorce to divide assets held in a retirement account. It’s imperative to understand that, first and foremost, assets held in a retirement account are subject to division so long as it is deemed marital property. Typically, the funds you accumulate in your account are deemed joint assets so long as you accrued them during your marriage. As such, they are subject to division under Florida’s equitable distribution laws. This means that all marital property is subject to division based on each spouse’s contribution to the marriage, rather than automatically dividing everything equally.
If you wish to withdraw funds from your retirement account early, meaning before age 59 and 1/2, you will face a 10% tax penalty. As such, the court can order a QDRO to split the funds without a tax on the money. However, you should note that you must deposit these funds into a qualified retirement account to avoid facing a tax on the money.
What Retirement Accounts Are Included?
You should note that not all retirement accounts are covered under a QDRO. Generally, only Employee Retirement Income Security Act (ERISA) qualified plans are eligible. This includes 401(k)s, profit sharing plans, 457s, 403(b)s, and profit sharing plans. As such, you cannot use a QDRO to divide the funds held in military pensions, IRAs, deferred annuities, and federal or state retirement plans.
It’s imperative to understand that if you have a 401(k), it’s important to understand that only the funds accumulated during the marriage are subject to division. As such, if you have a retirement plan with $10,000 in it before your marriage, and you accumulate $60,000 over the course of your marriage, only the funds accumulated during your marriage are subject to division. The initial $10,000 would be deemed your separate property.
As you can see, navigating a divorce can be incredibly complex. That is why it’s imperative to connect with an experienced divorce attorney with Tampa Law Group to help you through these difficult times. We understand that navigating these matters can be overwhelming, which is why we are committed to helping you recover the funds you deserve. Contact us today to learn how we can fight for you.
