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How are retirement accounts handled in a TX divorce situation?

For many people the single biggest asset besides their house is their retirement account. For couples who are going through a divorce the retirement accounts that have amassed can prove to be a big, complicated issue to work through in the property division area. So how are retirement accounts distributed in a divorce?

Retirement accounts are viewed as income earned by the spouse during marriage. Contributions that are made to the retirement account while the couple is married is considered community property. Retirement assets that are accumulated before marriage are generally considered separate property and not included in the divorce settlement.

In order to divide a qualified retirement benefit like a pension or a 401K the court will generally require a Qualified Domestic Relations Order or a QDRO. The QDRO will give instructions to the retirement plan's administrator as to how the benefits should be distributed. Many times the QDRO will spell out how the spouse will receive payment from the retirement plan. Retirement benefits may be received as a lump sum payment or on a monthly basis at retirement age, or other circumstance depending on the plan. In some instances a spouse may also have an unqualified retirement benefit like an excess benefit plan which would not be covered by a QDRO. Any non-qualified deferred retirement benefit needs to be worked out separately.

Because retirement benefits can be complicated it is important that a person consults with a legal professional who is skilled in divorce and retirement benefits. An attorney can help an individual establish a QDRO that is fair for their circumstances. If a QDRO is not properly handled the results can be devastating.

Source: Wall Street Journal, "Splitting up nest eggs", Glenn Ruffenach, Feb. 20, 2010

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Attorney Christine K. Lincoln

Christine K. Lincoln offers sound counsel and legal services to protect clients and their families facing divorce and other family disputes.

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