For many spouses going through
divorce, the largest and most
complex community assets are the retirement accounts and other employment benefits. Three of the
most common types of retirement accounts and employment benefits are deferred
compensation plans (e.g., pension plans), defined contribution plans (e.g.,
401(k)s and IRAs), and stock options.
The attorneys at the Law Office of Bryan Fagan are experienced family lawyers
that have knowledge in
marital property division in Texas. Contact us for assistance and representation in regards to retirement
and employment benefits.
Issues Affecting the Division of Retirement and Employment Benefits in Texas
- Deferred Compensation Plans
- Defined Contribution Plans
- Stock Options
- Job Specific Retirement Benefits
- Qualified Domestic Relations Order (QDRO)
- How We Can Help
Deferred Compensation Plans
Deferred compensation plans provide a certain amount of money to an employee
usually upon reaching normal retirement age after a pre-determined number
of years of service. The amount of the benefit is usually calculated by
averaging the employee’s income, and then multiplying that average
by a ratio of the age of the employee and the number of years of credible
service to the employer.
Defined Contribution Plans
Defined contribution plans are accounts that contain stocks, cash, and
other liquid assets. Employees contribute a portion of their salaries
to the plan, and the employer will often match the employee’s contribution
up to a certain percentage. These accounts typically have a specific value
on any one day; no matter the age or years of service of the employee.
The return on investment (ROI) of contributions will establish the absolute
amount of their fund. These plans are more transferable than defined benefit
plans given that employees can turn over their contribution funds into
a new employer's retirement plan.
Examples of defined contribution plans are:
- Profit sharing plan
- Stock savings plan
- Individual Retirement Accounts (IRA)
- Roth IRA
- Educational IRA
- Deferred compensations plan
Stock options are shares of the company granted to the employee as a reward
for service to the employer or to compensate the employee over and above
salary or hourly wage, and usually vest after a pre-determined amount
of time of employment.
Job Specific Retirement Benefits
Some professions will provide very specific retirement benefits. When going
through a divorce involving
property division or financial disputes, it's important to retain an attorney that is
familiar with your profession and it's retirement benefit plans. Teachers,
firefighters, police officers, and other professionals should consult
an attorney with knowledge of the retirement benefits particular to their
- Teacher Retirement System (TRS)
- Firefighter Retirement Plan
- Firefighter Retirement Fund
- Deferred Retirement Option Plan (DROP)
- Post Retirement Option Plan (PROP)
- Police Officer Retirement Plan
- Police Officer Retirement Fund
The first step the attorney must take in advising you about dividing these
assets is to determine what portion is community property. During the
discovery process, the attorney will request documents and ask written
questions of the spouse with the retirement benefits to determine the
present value of the asset, when the asset was accrued, and how the asset
was accrued. Once the necessary documents and other information are acquired,
the attorney will often consult with experts in other fields such as accounting,
tax, and federal ERISA law to determine the character of the asset - whether
Retirement and employment benefits are sometimes acquired partially before
marriage, and partially during the marriage. In order to determine the
marital property character of the benefits, the attorney and other experts must ‘trace’
the assets from the time they are acquired until the date of divorce.
Stocks split, new stocks are acquired, others are sold, and in order to
determine what portion is currently
community property, the process of tracing must be used.
Qualified Domestic Relations Order (QDRO)
Once the marital property character of the retirement benefit account or
employment benefit is determined, the parties and their lawyers can negotiate
the manner in which the benefits should be divided. As with other issues
in the divorce, if the parties cannot agree on how to divide their retirement
and employment benefits, the dispute can be submitted to the judge who
will make a just and right division of the assets.
Once an agreement is reached, the plan administrator for the retirement
account or employment benefit will require a Qualified Domestic Relations
Order (QDRO), in addition to the final divorce decree, to tell it how
the asset is to be divided between the spouses. The QDRO is a specialized
legal document that must comply with federal law and any additional requirements
of the plan administrator. It is imperative that the family law attorney
have the knowledge required to properly characterize retirement benefits
and to follow through with having them actually divided by the employer.
If you want to know more about what you can do,
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“16 Steps to Help You Plan & Prepare for Your Texas Divorce”
Other Articles you may be interested on regarding retirement accounts
- Can I Keep My Retirement in a Texas Divorce?
Is Social Security Considered Separate Property in a Texas Divorce?
- Will My Spouse Get Part of My Retirement in Our Texas Divorce?
- Dividing Property in a Texas Divorce - The Just and Right Division
- Why is Separate Property Important and How to Keep it Separate in a Texas Divorce?
- What Wikipedia Can’t Tell you About Texas Divorce and Marital Property Division
- Texas Divorce Property Division Enforcement
- Separate Property in a Texas Divorce?
- Does it Matter Whose Name is on Title or Deed of Property in a Divorce in Texas?
- Business Owners and Business Assets in a Texas Divorce
Law Office of Bryan Fagan | Houston, Texas Divorce Lawyers
The Law Office of Bryan Fagan routinely handles matters that affect children
and families. If you have questions regarding
divorce, it's important to speak with one of our
Houston, TX Divorce Lawyers right away to protect your rights.
divorce lawyers in Houston TX are skilled at listening to your goals during this trying process and
developing a strategy to meet those goals.
Contact Law Office of Bryan Fagan by calling (281) 810-9760 or submit your contact information in our online
form. The Law Office of Bryan Fagan handles
Divorce cases in Houston, Texas, Cypress, Klein,
The Woodlands, the FM 1960 area, or surrounding areas, including
Fort Bend County and