Dividing retirement assets during a divorce can be frustrating, even during a friendly divorce. It requires the court to issue a separate decree called a qualified domestic relations order. Since Florida is an equitable distribution state, couples have four choices regarding the division of retirement assets.
Keep the asset in exchange for something of equal value
The simplest solution is to keep your 401(k), IRA or another retirement fund in exchange for something else of equal value. For example, you may want to keep your retirement account worth $450,000 and give your spouse a house that is worth the same amount. While this is the easiest solution, many couples find that it does not work for them.
Divide the asset
Your retirement fund manager can divide the asset so that you are not responsible for regularly sending your soon-to-be-ex money. Both of you can continue to get benefit distributions like you were still married. In most cases, the distribution will continue until the person earning it passes away.
Liquidate the asset
You may be able to turn the asset into cash and split it evenly. There could be substantial tax reasons why this is not a good idea, however, so contact a divorce lawyer or CPA before making this decision.
Roll the asset over
If the asset is a 401(k) and the person earning it has left their employer or is age 59.5, the asset can be turned into an IRA. Then, it can be divided with each person getting their fair share.
Since dividing any retirement fund can be troublesome, it may help to talk to a divorce attorney. A legal professional may assist you in choosing the plan that works best in your circumstances.