Retirement benefits of all kinds are treated as assets in a marital estate and are usually divided and distributed as any other asset—if it’s part of community property.
Like any asset, the key is whether the retirement benefits were acquired prior to or during the marriage period, or if it’s declared separate. Each spouse can keep their separate property and it is not affected by property division.
But to keep the separate property, you must also prove that it is separate, such as producing an account statement from right before the marriage date that shows the pre-marriage balance.
Any other assets acquired during the marriage and not declared as separate will be considered joint or community property and will be addressed that way. This includes retirement accounts.
How It’s Divided
While Texas law provides for the division of assets, including retirement accounts, it doesn’t always mean 50/50. The courts generally use the tenet of what’s “just and right.”
Retirement benefits are treated as an asset in community property and divided accordingly. You’ll either need to decide how to divide it up on your own in mediation, or a judge will do it for you in court.
However, a retirement account isn’t automatically divided—you’ll have to ask for it in your Original Petition For Divorce. Once the portion has been allocated in the Final Decree, there are laws that administer this division that you and your attorney are required to follow.
Qualified Domestic Relations Order (QDRO)
A divorce decree doesn’t automatically mean a disbursement. You’ll have to either request a Qualified Domestic Relations Order (QDRO) from the plan’s administrator or have your lawyer draft one for you. Until this document is completed, received and approved by, then qualified by the plan itself, it is not valid and the retirement plan cannot be divided.
The QDRO does three things:
- Sets the date for the division of the retirement account, whether on the date of the divorce or the date stated in the QDRO
- Sets the percentage or dollar amount each spouse will be granted
- Assign responsibility for any loan that may be against the retirement account
Without a QDRO, the account owner may be required to take a distribution from the 401(k) or other retirement accounts to give the other spouse as part of the settlement. Unfortunately, that can mean taxes and early withdrawal penalties that will decrease the disbursement amount.
It’s possible to submit your QDRO to the plan administrator for pre-approval before submitting it to the judge for signature.
Keeping Your Retirement
If you and your spouse each have your own retirement accounts, you can keep them if you both agree to it.
You’ll check the boxes in the final divorce decree that gives each spouse 100% of their own retirements. No QDRO is needed if both parties keep their own retirements and nothing is being split.
Get Help From Wendy L. Hart With Property Division In Fort Worth
Wendy L. Hart is an experienced family law attorney helping people throughout Tarrant County who are facing property division and other divorce-related matters. Wendy understands the process as well as the difficulties involved and will work to make sure your property division is the best for your family. We represent both and men and women. Wendy will make sure you’re treated fairly, protect your interests and those of your children.