Tampa Retirement & Pension Division Lawyer
According to the Pew Research Center, the rate of divorce amongst retirees has doubled since the 1990s, resulting in what we now call the “gray divorce.” Gray divorce is often much more complicated than the standard divorce—and may even be more complicated than a contentious divorce—as most elderly couples have significantly more shared assets than younger couples. Some such assets include retirement funds and pensions.
Retirement funds and pension accounts are considered marital property, just as the family home or vehicles are. However, whereas the family home can be sold and proceeds split – and whereas the family vehicles can be separated – retirement funds and pensions are not so easily divided. Sometimes, disputes arise because the working party does not think that the stay-at-home party is entitled to the funds. Other times, disputes arise because an account is an interest earning one and it is not yet time to withdraw funds. More often than not, disputes arise because of both these reasons. Whatever the reason for the dispute, dividing retirement and pension accounts can be a difficult and contentious endeavor. For this reason, you should work with a Tampa retirement & pension division lawyer when going through a gray divorce.
Using a Qualified Domestic Relations Order to Divide Retirement and Pension Accounts in a Florida Divorce
Typically, all marital assets or forms of income earned during a marriage are subject to property division in a Florida divorce. However, when assets include bank accounts or retirement accounts, they are categorized as a QDRO. According to the Department of Labor, a QDRO is a “domestic relations order that creates or recognizes the existence of an alternate payee’s right to receive, or assigns to an alternate payee the right to receive, all or a portion of the benefits payable with respect to a participant under a retirement plan.”Plans recognized as a QDRO include the following:
- Private pensions;
- 401(k) plans;
- Government or military pensions;
- Stock options and deferred compensation;
- Salary, bonuses, and commissions; and
- Other qualified retirement plans.
A QDRO allocates the couple’s total nest egg in accordance with the parties’ mediated agreement. It then defines how an alternate payee will obtain all or part of the benefits a retirement plan participant has accrued.
Valuing Pension & Retirement Accounts
Part of what makes dividing pension and retirement accounts so difficult is that the amount of money in the account does not often equate to the amount of marital money used to grow the account. For certain accounts, such as pensions, the courts must also take into consideration the future worth of the account.
For instance, an IRA that was opened during the marriage and grown with strictly marital funds would be easy to distribute, as it would be subject to equitable distribution laws. However, if a plan participant started contributing to the account prior to the union, and/or if the account is an employer contribution account, things can become more complex.
Things become even trickier when dealing with a defined-benefit plan. With a defined-benefit plan, there are many yet-to-be-determined factors. For instance, a pension is often determined based on the number of years of employment and the salary earned in the last year before retirement. If the plan participant is still working, it can be impossible to determine the plan’s value.
The Florida courts will do their best to value a not-yet-matured plan by taking the following factors into consideration:
- When the employed spouse will be eligible for retirement;
- The employed spouse’s life expectancy;
- The discounted value of the pension at the date of separation;
- The anticipated value of the pension on the earliest retirement date; and
- Any contingencies that may reduce the value of the account.
Retain the Help of a Knowledgeable Retirement and Pension Division Lawyer
Whether you are going through a gray divorce or have acquired significant retirement assets in the early years of your career, you can benefit from the help of a Tampa divorce lawyer who is qualified in the division of retirement accounts. Contact Pawlowski//Mastrilli Law Group to discuss your unique case today.