Question: What happens to an IRA or (401(k) in a divorce in Florida?
An IRA or 401(k) are retirement accounts that offer the benefit of deferring income tax to the future. Typically, these accounts are marital assets to the extent they were created or contributed to during the marriage.
Generally, three situations arise involving these types of retirement accounts. The first situation is when the account is created and contributed to during the marriage. In this situation, the entire account is marital property and can be divided between the parties by the judge.
The second situation is when a spouse has the retirement account prior to the marriage and does not add to it during the marriage. In this situation, the account is not marital property and it will not be divided between the parties by the judge.
The third situation is when a spouse has the retirement account prior to the marriage and contributes to the account during the marriage. In this situation, only the portion of the account that was created during the marriage is considered marital property subject to division by the court.
For example, suppose that just prior to your marriage, you have an IRA with $50,000 in it. While married, you continue contributing to the account. When you get divorced, there is now $75,000 in the account, In this situation, only $25,000 is marital property since it was added to the account during the marriage.
Often each account is not divided, even if they are all marital accounts. The spouses may still be left with roughly equivalent values in their retirement accounts, but this can sometimes be accomplished by making a single transfer instead of multiple transfers.