Subject to certain rules, you most likely qualify for retirement benefits your spouse earned while working during the years of your marriage. However, you do not receive benefits automatically. You need to take specific legal action to make sure your rights are stipulated within your spouse’s plan.
If your spouse participates in a qualified retirement plan with an employer, you are most likely an alternate payee of a portion of the benefits from the plan. In the event you divorce, you still qualify for these benefits, provided you pursue a Qualified Domestic Relations Order (QDRO), which is often requested of the judge as part of your divorce settlement. A QDRO must meet specific IRS requirements:
- It must recognize that alternate payees exist and have a right to some portion of benefits from a qualified retirement plan.
- It must allocate benefits subject to Florida domestic relations law and provide benefits for child support, alimony or marital property to a designated alternate payee, such as a spouse, ex-spouse, child or other dependent.
- In addition to providing information about each alternate payee, it must identify all plans involved and stipulate the percentage of benefits for each payee and the time period covered by the order.
QDRO distributions are taxable to the recipient, but you can take certain actions to delay the tax consequences, such as rolling the funds into a qualified Individual Retirement Account (IRA) within 60 days of receipt. Moreover, to avoid federal tax withholding, you need to arrange for a direct rollover. The rules can be complex and confusing, but your primary role is to help your Boca Raton divorce attorney identify any retirement plans subject to a distribution. Your attorney can then take appropriate action to make sure you understand the important details.
Protecting your rights in a Florida divorce requires a law firm with knowledge of state and federal laws. The law firm of Feldman & Schneiderman, P.L. is dedicated to ensuring our clients pursue the retirement benefits and other assets they deserve — so they can start new lives after their divorce.