Retirement Accounts, Pensions And Investments In Divorce
What happens to retirement accounts and employee or military pensions in a Texas divorce is a critical consideration that many people do not think about until divorce is looming. It is a common mistake to assume that the person who earned these benefits through work or military service will maintain sole rights to them.
What Will Happen To Retirement Savings And Benefits When We Divorce?
At The Law Office of J. Kevin Clark P.C. in Tarrant County, we often hear questions such as:
- Can I keep the retirement savings I built up in my 401(k) or the pension benefits I earned through work or military service?
- Since I have worked primarily as a parent and homemaker while my spouse worked outside the home, I am depending on the retirement savings he (or she) accumulated. Will I receive those funds or benefits when we divorce?
The most direct answer to both concerns begins with the fact that Texas is a “community property” state. Generally speaking, like all other assets accumulated during the marriage, qualified retirement accounts and pension benefits are typically subject to equitable division between the parties in a divorce.
This applies to savings and benefits including 401(k) plans, pensions administered by the Teachers Retirement System (TRS), railroad pensions and, in some cases, military retired pay. That said, every situation is unique. It is important to work with a lawyer experienced in dealing with these issues because, for example:
- It may be necessary to establish what portion of your retirement accounts and other assets qualify as separate (nonmarital) property obtained prior to your marriage.
- Under certain circumstances, as when both spouses earned comparable benefits, it may be legal and practical for each to keep his or her own accounts.
What Are Qualified Domestic Relations Orders (QDROs)?
Reaching agreement on how retirement savings will be divided is not the only step required. Actual division requires completion of a QDRO, which must be approved by a judge and the plan’s administrator. When assisting clients who are facing divorce with retirement accounts, pensions and investments involved, we draft these orders properly and effectively.
Fort Worth family law attorney Kevin Clark has the knowledge to address all your concerns involving divorce and your finances. To arrange a consultation at a time that works for you, call 817-348-6723 or send us an email now.