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San Antonio Retirement Asset Division Attorney
Retirement Accounts, Pensions, and QDROs
Couples who choose to divorce will need to address many different issues related to their finances, their property, and their debts. Gaining a full understanding of these matters can sometimes be difficult, especially if you are dealing with other divorce-related issues, such as handling the emotional fallout that comes from the end of a long-term relationship, making changes to living arrangements, and resolving disputes regarding child custody. Certain types of property-related issues, including those related to retirement savings and benefits, may seem less important, especially if they will not affect you for many years. However, handling these matters correctly can be crucial for protecting your financial future.
When addressing complex property issues during your divorce, you will want to make sure you are represented by an attorney who can help you understand the laws that affect you and the requirements you will need to meet. Brandon Wong & Associates provides strong and effective representation in divorce cases, and we can guide you through the divorce process and make sure you properly address matters related to retirement plans, investments, and other financial concerns. We will work to help you reach agreements on these and other issues, and if necessary, we will be fully prepared to advocate for you in the courtroom.
Dividing Retirement Accounts and Pensions
For many people, retirement savings accounts or other retirement plans can be valuable assets. Over a person's career, they may put a significant amount of money away that they plan to use to support themselves after their retirement. In many cases, employers who provide retirement plans will match a certain percentage of an employee's contributions to an account. Some employees may also be eligible for pension benefits that will be paid to them on an ongoing basis after they retire. Any contributions to a retirement account or other benefits earned during a couple's marriage will be community property that must be considered during a couple's divorce.
Couples may choose to divide retirement accounts or allocate pension benefits in a variety of ways. In some cases, each spouse may keep their own separate retirement accounts while distributing other assets in a way that allows both parties to receive a fair and just share of the marital estate. In other situations, the funds in an account may be divided between the spouses. It is important to follow the correct procedures when transferring funds from an account.
Most retirement accounts only allow withdrawals to be made after a person reaches retirement age, and penalties may apply if money is withdrawn before then. Taxes will also usually be applied to funds that are withdrawn. To avoid these issues, a couple can use a court order known as a qualified domestic relations order, or QDRO. This order will be provided to the administrator of a retirement plan, and it may state that a certain percentage of funds or a specific dollar amount will be withdrawn and transferred to the other spouse. That spouse can then place the funds in their own retirement account.
A QDRO may also be used to allocate pension benefits. The value of these benefits can sometimes be difficult to determine, since they will usually be based on the income a person earns at the time of their retirement. However, a person's ex-spouse may be entitled to receive a certain percentage of the pension benefits that are paid out, and a QDRO will provide a pension plan administrator with the proper instructions for making payments to an alternate payee.
Retirement Asset Division FAQs
Retirement accounts are treated like any other asset in a divorce. They may be classified as either community or separate property depending on the date of acquisition and whether contributions were made to accounts during a couple’s marriage. Transferring retirement assets between spouses can trigger early withdrawal penalties, but this can be avoided through the use of a special court order known as a Qualified Domestic Relations Order, or QDRO.
A QDRO, or Qualified Domestic Relations Order, is a special legal instrument that is often used in divorces specifically to divide retirement plans like 401(k)s and pensions. The main purpose of a QDRO is to allow retirement assets to be transferred tax-free while avoiding any early withdrawal fees.
While a lawyer is not strictly necessary to draft a QDRO, seeking experienced legal counsel is highly recommended. A San Antonio retirement asset division lawyer can help you determine how much of your retirement plan is subject to division while compiling the necessary documents needed to draft the QDRO.
In a divorce, Texas courts divide community property, including retirement assets, in a just and right fashion. This does not always entail an equal split of assets. The courts may consider both spouses’ economic resources, opportunities for employment, and other relevant factors.
Under Texas law, military retirement benefits accrued during a marriage can be considered community property that is subject to division. If a civilian spouse was married to a servicemember for at least 10 years of service, the civilian spouse may be entitled to direct payments of the military spouse’s benefits.
Generally, retirement assets acquired before the marriage are considered separate property, while retirement assets accrued during the marriage are considered marital property, regardless of whose name is on the account.
The best way to avoid penalties for withdrawing assets from your 401(k) or pension is to use a Qualified Domestic Relations Order (QDRO), which can allow you to transfer the funds without incurring an early withdrawal penalty.
Under the Employee Retirement Income Security Act, many types of retirement accounts cannot be seized by creditors in civil lawsuits. However, your retirement assets could be seized to enforce an order of child support, alimony, or other divorce-related issues.
If you contributed to a retirement account before your marriage, those funds will likely be safe from division in a divorce. This is in line with Texas’s laws regarding property ownership, which state that any assets acquired before a marriage are considered separate property. If you want to protect retirement assets that were acquired during your marriage, you could consider signing a prenuptial or postnuptial agreement with your spouse.
Filing a QDRO in Bexar County may take several months, factoring in the time needed to get information about retirement plans, draft the order, secure approval from the plan administrator, and submit the QDRO to the court. Assistance from an attorney can help to reduce unnecessary delays while making sure that each step is followed correctly.
Contact Our Bexar County Retirement Asset Division Lawyers
Understanding how to address retirement benefits during the divorce process can sometimes be difficult. Our attorneys can provide guidance in these matters, and we ensure that our clients' best interests are protected in the decisions made as part of a divorce settlement or through courtroom litigation. To learn how we can help you resolve financial issues correctly while ensuring that you will have the resources you need in the future, contact us and set up an initial consultation by calling 210-201-3832.
From our office in San Antonio, we provide legal help to clients throughout Central Texas, including Converse, Seguin, Selma, Windcrest, Schertz, Live Oak, New Braunfels, Alamo Heights, Balcones Heights, Castle Hills, Hollywood Park, Shavano Park, Leon Valley, Helotes, Boerne, Bexar County, Comal County, Kendall County, Guadalupe County and Medina County.
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