Spouses in Fort Worth and Dallas are entitled to part of your retirement accounts in Texas because the federal law surrounding retirement plans allows for spouses to earn an interest in your retirement accounts during the marriage. State law allows for family courts to divide these assets based upon a domestic relations order. (That usually becomes a QDRO when the plan qualifies it.)
In this case, state law provides the method to divide the accounts. The law states that employment income earned during a marriage is joint marital property. Because retirement savings are part of that income, the spouse has an entitlement to the marital property accrued in employer retirement plans. These rules are confusing. Working with a divorce attorney in Bedford, Dallas, or Fort Worth can be extremely helpful to protect your property rights.
Spousal interests in benefits during a Fort Worth divorce
In the event of a divorce, your spouse has an interest in a particular part of your benefit. He or she does not get half of everything. Instead, the spouse receives half of the benefit accrued during the marriage plus gains or losses attributable to it. Sometimes a spouse can receive part of future benefits when based upon work performed or income earned during the marriage.
In order for your spouse to receive his or her part of the assets, following a divorce order (or concurrent with it) the family court judge must sign a domestic relations order, which orders the plan to segregate the assets based upon the divorce order. The plan will then determine if the order meets plan rules. If it does then it qualifies the order and creates a QDRO.
Texas has a formula it requires the plan to use to determine the benefit attributable to the spouse. This formula has the effect of giving the spouse the portion earned during the marriage that I explained above. It is not mandatory to divide retirement assets or for the spouse to receive the full portion. In some cases the spouses agree to leave retirement assets undivided. In other cases spouses may try to reduce the amount divided out. As long as the division is acceptable to the plan then the order will become a QDRO.
QDRO process in a Dallas-Fort Worth divorce
Once the judge signs the order it is extremely important that the plan receives and qualifies it. If the administrator does not receive the order and does not qualify the order then the plan is under no duty to divide the former spouse’s assets. This can create difficult and costly problems trying to recover those funds if the former spouse takes the money out before the order becomes a QDRO or if the former spouse dies without the QDRO in place to secure the assets.
Because retirement assets are usually one of the largest assets in a marriage, it is important that you carefully consider how these savings will be divided in a divorce. You should speak with a divorce lawyer qualified to address both the divorce and retirement plans.