Your Right to Retirement Assets
Retirement accounts remain an extremely valuable asset and can provide you with an income when you stop working. In fact, many couples often contribute to their retirement savings together through payroll deductions to grow it to a significant amount. In the event of a marital dissolution, the couples must divide their retirement assets between themselves according to state laws, just like other marital property – and this can be a stressful process.
Fortunately, Attorney Robin Scott proudly guides individuals and couples in legal matters of divorce and asset division. As a knowledgeable Texas family law attorney, Robin is available to discuss your situation and inform you about your rights to retirement assets during a divorce. The firm proudly serves clients across Spring, Texas, and throughout Montgomery, Harris, and Fort Bend counties.
Division of Property in Texas
Texas follows the community property jurisdiction during the division of asset in divorce. According to state laws, all marital property and debts accumulated during the couple's marriage must be distributed in a manner that is "just and right." To achieve this, the Texas court may consider the following factors:
The unequal earning power between the spouses.
The fault in the marital breakdown, such as adultery, substance abuse, and wastage of community property.
Each spouse's age, health, and education.
The amount of separate property owned by each spouse.
Whether one spouse has child custody.
Future employability of the spouse.
The tax implications of the property division.
Where the property was acquired.
Any other factor that is deemed relevant by the court to achieve a just and right property division.
A seasoned divorce lawyer can tell you about how property division affects your retirement savings and determine the best way to protect it.
How Retirement Assets Factor In
However, the distribution rules for dividing your retirement savings during a marital dissolution often depend on the type of retirement plans you operate with your estranged spouse. The different forms of retirement accounts include:
Payroll Deduction IRAs
Traditional retirement plans, such as 401(k), IRA, and annuities
Generally, any income or asset that either party contributes to the retirement savings during the course of the couple's marriage will be regarded as marital property. As a result, they must be divided in a manner that is just and right during asset division. Conversely, amounts contributed to the retirement savings prior to the marriage will be separate assets. This will belong to the party who contributed it.
If the couple didn't establish a prenup or other written contract with contrary provisions, the couple will be legally entitled to share or receive part of the retirement accounts and benefits. To preserve your share of the retirement benefits until the division of property is finalized in your divorce, you may need to file a Qualified Domestic Relations Order (QDRO).
Qualified Domestic Relations Order (QDRO)
A Qualified Domestic Relations Order (QDRO) is a written document that allows for both parties to separate their combined retirement or pension plan. Also, the QDRO outlines how divorcing couples can distribute their retirement benefits.
What Does the QDRO Do?
Based on the exact amount contributed to your retirement savings, filing a QDRO can help achieve the following:
Prevent your ex-partner from withdrawing or taking out funds from the retirement savings.
Prevent your ex-spouse's employer from paying your ex-spouse directly from the retirement accounts.
Inform the retirement plan administrator to transfer your portion of the retirement benefits to you.
Punish or hold your ex-spouse liable for withdrawing money from the retirement accounts.
A trusted family law attorney can help file your QDRO petition and help you understand the legal and tax ramifications of distributing retirement savings in a divorce.
Tax Implications of Dividing Retirement Assets
Retirement transfers are tax-free (non-taxable) in the state of Texas. However, if you withdraw out of the retirement account prior to reaching the age of retirement (59 ½ years), your savings may be subject to a 10% early withdrawal tax penalty. However, if you divide the retirement savings with your estranged partner according to the provisions and instructions of the divorce order, you can avoid or reduce the early withdrawal tax penalty.
Protect What's Rightfully Yours
Dividing marital assets, retirement benefits, and pension plans in a divorce usually involves several complicated processes and legal paperwork. Attorney Robin Scott has the diligence and knowledge to assist and guide divorcing couples through the complexities of property distribution, including the division of retirement benefits. As your legal counsel, she will work intelligently with all parties involved to achieve a just distribution, file a QDRO to protect your retirement benefits, and help you recover what rightfully belongs to you.
Contact Robin Scott Law Firm, PLLC, today to schedule an initial consultation with a practiced family law attorney. Attorney Robin Scott can offer you the brilliant advocacy and personalized legal counsel you need to make intelligent decisions in your divorce and property division matters. The firm proudly serves clients across Spring, Texas, and throughout Montgomery, Harris, and Fort Bend counties.