Most Texas residents have some sort of retirement plan that they contribute to throughout their working life. The most common types of retirement plans include 401(k)s, IRAs and pension plans. When married individuals undergo the divorce process, their retirement plan is part of the division process.
Pay close attention to separate and marital property
When it comes to the topic of asset division during a divorce, it’s vital that you understand the difference between separate property and marital property. In most cases, your retirement account is considered marital property as you contributed to it during your marriage.
However, if you contributed to your retirement account before you got married, those premarital contributions are typically considered separate property. This is property that you can retain full ownership of without having to split it with your former spouse. It’s important that you speak with your attorney to determine the amount of separate retirement funds that you have compared to the remaining marital property.
How to divide retirement accounts
When it comes to the division of your retirement account, you’ll need the judge to award a specific order. The specific order that is awarded will depend on the type of retirement plan that you have. Qualified domestic relations orders, or QDROs, are commonly used for 401(k) retirement plans. IRAs, on the other hand, need a transfer incident to divorce order. The spouse whose retirement account needs to be separated will need to submit the appropriate order to the manager of their retirement account for it to be effective.
If you’re going through a divorce, it’s likely that you have a lot of questions regarding the division of your property. Retirement accounts tend to be the most confusing to split. If you’re still a little fuzzy about what is going to happen to your retirement account, it’s advisable to hire an attorney to assist with your case.