As an equitable division state, Florida requires the courts to determine the fair division of property during divorce. Assets include tangible items such as cars and the home, as well as retirement savings accounts.
Splitting retirement funds can cause tension when one spouse contributes more than the other. Understanding how the courts could distribute the savings may make it easier for each person to prepare for the proceedings.
Dividing traditional savings accounts
Money set aside into IRAs, 401Ks, and annuities during a marriage is marital property. The savings in these accounts belong to both parties regardless of who earned them. The total amount in the savings funds at the time of divorce, minus any portion deposited before marriage, gets split equitably in one of three ways:
- Either person can request funds from the accounts at the time of divorce, possibly resulting in penalties for early withdrawal
- The money remains in the accounts until after retirement age, and then each party receives the funds as a lump sum or equal payments
- Each individual withdraws their part and rolls it over into a separate retirement account for future use, therefore, avoiding penalties
If one person has an employer-sponsored savings plan and continues to work and contribute funds to the account, that money is not eligible for division.
As with other savings plans, pension funds accumulated during marriage are marital property. Both parties may receive a specified portion of the pension as a lump sum or equal payments upon the earner’s retirement.
While all divorces are unique, knowing that each party receives a share of the retirement savings regardless of who made the contributions allows them both to have financial security upon retirement.