How do courts handle retirement funds in a Florida divorce?

When you start thinking about divorce, a million questions come up. One that far too many people wait to worry about is the impact on retirement plans. Divorce can wreak havoc on your potential retirement, even if you've been carefully saving and investing for years. After all, you planned your retirement budget and savings based on the idea of having one household and two people living there. Now, those same funds will probably have to support two households through retirement. 

Whether you have an employer-sponsored pension or a privately held retirement account, such as a Roth IRA, chances are the courts will divide the funds in divorce. Unless there is a prenuptial agreement on record stating that the pension or retirement account belongs to only one spouse, most of the money in the fund is likely marital property. 

Who owns the accounts doesn't really matter to the courts

You may think that because your retirement account or pension is only in your name that it is separate property. Unfortunately for you, the courts probably won't agree with that assertion. Typically, the dates of deposits will matter much more than the name on the account. Deposits made before your marriage and after you file for divorce will not get split. Any amounts deposited during the marriage, however, likely will. 

In Florida, almost all assets acquired during a marriage count as marital property. That includes income that goes into retirement accounts or investment funds. The reason why is simple. Even if your wife didn't make enough to start a retirement account or didn't even work, her unpaid work at home contributed to your household and marital assets. Because you didn't need to hire help for childcare, cleaning or other household chores, you were able to save more. The work your wife did contributed to your household, even if she never made a single deposit into your retirement account. 

Accounts may be split or subtracted from other assets received 

Typically, the courts handle retirement funds and pensions in one of two ways. They may issue a court order for the division of these funds. In the case of retirement accounts, like Roth IRAs or 401Ks, that may mean splitting the account shortly after the divorce. For pensions, there may be a court order awarding your spouse a portion of each pension payment once you begin to receive it. 

In some cases, instead of splitting your account or your pension, the value of the account could get deducted from other assets you receive in the divorce. Exactly how that process goes will depend on a variety of factors, including the value of the accounts and the requests of both you and your spouse. You should expect roughly half of the amount deposited during the marriage to go to your spouse in divorce. 

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