Dividing Retirement Benefits Upon Divorce

Retirement benefits include:

• pensions,
• deferred compensation accounts,
• 401(k) accounts,
• Individual Retirement Accounts (IRAs), and
• other retirement savings plans.

The Pension Rights Center offers general information about pensions and other types of retirement benefits at Retirement & Divorce, and so does the Women’s Institute for a Secure Retirement (WISER) at Divorce Resources.

It depends on whether contributions to the account were made before or after the date of marriage. Contributions made before the marriage are the separate property of the spouse who made them. Contributions made during the marriage are the community property of both spouses, regardless of whose name is on the account or which spouse contributed through employment. Some retirement accounts are made up of both community and separate property.

See also Dividing Your Property and Debt in a Divorce.

It depends on the type of retirement. Most retirement savings plans—like 401(k)s—can be divided on divorce regardless of the duration of the marriage. For these types of plans, the court is not required to split the retirement evenly between the spouses. Pensions, Social Security spousal benefits, and military retirement have different rules for eligibility and for when you are entitled to receive the funds.

Most contributions to an employer-based retirement program will appear on the spouse’s earnings statement or pay stub. Retirement and 401(k) accounts typically send periodic statements by mail and in the New Year before tax time. Government employees usually have a pension.

If you are having a difficult time figuring out what retirement accounts your spouse has, you may have to do some discovery. Discovery is the process of gathering information (facts, documents, or testimony) before a case goes to trial through depositions, interrogatories, requests for admissions, or by talking with the other side's lawyer. Read Discovery in Texas: Investigate and Prepare for Trial.

In many Texas counties, standing orders automatically take effect when a divorce is filed. Standing orders forbid either party from withdrawing funds from retirement accounts. If your county doesn’t have standing orders, ask for a temporary restraining order or temporary orders with the same provisions. A party who disobeys these orders risks being held in contempt of court.

Tip: If you are thinking about divorce, it may be easier to gather financial information before you file.

To be eligible, you must have been married 10 years or longer and meet other requirements. Social Security Spousal Benefits are based on your spouse’s work history. The amount of spousal benefits may depend on the social security benefits you’ll receive based on your own work history. Contact your local Social Security Office or visit www.ssa.gov.

Spousal benefits from military retirement are based on how long your spouse was in the service while you were married. If eligible, you can receive payments directly from the service member’s retired pay. For information, visit the Defense Finance and Accounting Service FAQs. It includes information about the Uniformed Services Former Spouses’ Protection Act (USFSPA).

You and your spouse can agree that each of you will keep the retirement accounts under your own name and not divide them. Or you can "cash out" your spouse’s share as part of the divorce settlement. Another option is to agree to exchange community property equal to the value of your spouse’s share of retirement.

In most cases, you’ll need a court order called Qualified Domestic Relations Order, or QDRO. A QDRO is an order signed by the judge, separate from your divorce decree, that directs your former spouse’s employer to divide the retirement benefits according to the decree. If you didn’t get a QDRO when your decree was signed, Texas law allows you to go back to the court later to get your QDRO signed.

Laws that govern QDROs in Texas include Texas Family Code 7.003 and Texas Family Code 9.101,

For more about QDROs, talk to a lawyer. Use TexasLawHelp's Legal Help Finder tool to locate a lawyer. You can also contact the South Central Pension Rights Project.