Division of Retirement Funds

Houston Property Division Lawyer

Dividing 401(k) Plans and Pension Plans in Divorce

The division of pension funds in divorce can be complicated and confusing. If you have questions about how retirement plans are divided in divorce, contact me, Houston property division attorney Leonard M. Roth, to schedule an appointment and discuss your case.

Separate and Community Property

If you were in an employee benefit plan prior to marriage, that plan is your separate property up to the time of marriage and is not subject to division by the court. That amount earned or acquired during marriage is divisible by the court. Normally, these accounts are split evenly, 50-50, except by agreement or by court order due to relevant facts such as:

  • Proof of a fault ground
  • Wildly uneven earning capacities of the parties
  • Disparity in business acumen (the ability to make money)
  • Disparity in health
  • Custody of children
  • Separate property estates

You can agree to whatever division you want and the Court will not disturb that agreement. While each case is different, in general, pension funds are divided in the following manner:

  • The amount to be divided reflects the value of pension funds as if the employed spouse had stopped working on the day his or her divorce decree is signed
  • That amount is multiplied by the number of months the couple was married, divided by the number of months a working spouse paid into a pension plan.

This final amount is considered community property and subject to division.

Qualified Domestic Relations Orders and Retirement Fund Division

Equity earned over the course of a marriage in a pension fund, 401(k) savings account, or IRA is subject to division upon divorce. There are, however, certain issues that must be taken into account that can complicate how retirement funds are divided.

In general, a qualified domestic relations order (QDRO) must be prepared, sent to the Plan Administrator and approved by the Plan Administrator of a retirement plan (QUALIFIED). Then the QDRO must be signed (executed) by your Court (DOMESTIC RELATIONS ORDER) to provide the alternate payee (ex-spouse) with an ownership stake in his or her former spouse's pension plan by creating a separate, individual account in that plan for the non-employed ex-spouse. Only those plans subject to the Employee Retirement Income Security Act (ERISA) require a QDRO. As such, when filing a QDRO, it's essential that it comply with ERISA guidelines.

While retirement plans subject to ERISA are divisible through a QDRO, in general, a qualified domestic relations order can be used in regard to the following:

  • 401(k)
  • Deferred pension
  • IRAs
  • Stock options
  • Military pension plans
  • Federal employee and civil service retirement plans
  • State of Texas pension plans
  • County pension plans

At Leonard M. Roth, Attorney at Law, I help clients prepare and file all necessary paperwork with a plan's administrator related to QDROs. My office ensures all necessary documentation is included and that the forms used are ERISA-compliant and accurate.

Contact Houston, Texas Divorce Attorney Leonard M. Roth

If you have questions or wish to discuss your concerns with a Houston divorce lawyer, contact my law office to schedule a consultation.