How Divorce Affects Your Retirement Savings


Community Property Division Can Impact Your Retirement Plans

Texas is one of many community property states. As such, when a couple divorces, anything acquired throughout a marriage is typically subject to an even split between spouses. However, dividing retirement benefits is often more complicated, with one’s entitlement to their spouse’s accounts and pensions varying depending on the length of their marriage.

Retirement Benefits

Any money that you or your partner set aside for retirement during your marriage, including the period where your divorce is pending finalization, is viewed as community property. This includes retirement savings in:

  • 401K
  • Deferred compensation accounts
  • IRA
  • Pensions

Contributions made prior to your marriage, however, are considered separate property.

Social Security Benefits

Your partner may qualify for one-half of your Social Security retirement benefits. They qualify for benefits based on your record if:

  • The two of you were married for at least 10 years
  • They are unmarried
  • They are at least 62
  • The benefits they are entitled to based on their own work is less than what they could receive based on your record
  • You are entitled to Social Security retirement benefits or disability benefits

Your spouse can receive benefits so long as they meet the above criteria and you two have been divorced for at least two years.

Social Security payments made to your former spouse based on your record will not decrease the amount of retirement benefits you receive.

Qualified Domestic Relations Order

A qualified domestic relations order (QDRO) is a legal document that can be created alongside, yet still separate from, a divorce decree. The order formally directs a spouse’s employer to divide retirement pensions in accordance with the decree.

If couples were unable to complete a QDRO at the time of their divorce, they may return to court at a later date to present the document to the judge to accept and sign it.

The Springer Law Firm can help Katy residents prepare for divorce and work to protect their retirement savings. Contact us online or at (281) 990-6025 for more information.

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