How Are Retirement Accounts Divided in Florida Divorce?

The General Rule: Marital Portions Are Subject to Division

Under Florida Statute § 61.075, any retirement benefits accrued during the marriage are marital property, subject to equitable distribution. This includes 401(k) contributions, pension service credits, IRA deposits, 403(b) balances, and deferred compensation — regardless of whose name is on the account.

Benefits accrued before the marriage or generally after the filing date are nonmarital and stay with the account holder.

The critical distinction for retirement accounts is how you divide them. The wrong transfer method triggers immediate income taxes and a 10% early withdrawal penalty — a mistake that can cost tens of thousands of dollars.

401(k) and 403(b) Plans: You Need a QDRO

Employer-sponsored plans governed by ERISA (Employee Retirement Income Security Act) cannot be divided by the divorce decree alone. You need a Qualified Domestic Relations Order — a QDRO — which is a separate court order that instructs the plan administrator to pay a portion of the account to the non-employee spouse (called the "alternate payee").

With a properly drafted QDRO:

• The transfer is tax-free if the funds move directly into the alternate payee's own retirement account or IRA
• If the alternate payee takes a cash distribution directly from the plan, it is exempt from the 10% early withdrawal penalty (but standard income tax still applies)

Without a QDRO — say, one spouse simply writes the other a check — the IRS treats it as a taxable distribution from the account owner's plan. That means income tax at the owner's marginal rate plus, where applicable, the 10% early-withdrawal penalty.

IRAs and Roth IRAs: No QDRO Needed

Traditional IRAs and Roth IRAs are not governed by ERISA, so they use a different mechanism. The divorce decree itself authorizes the split under IRC § 408(d)(6), and the funds are moved via a trustee-to-trustee transfer between financial institutions.

The key rule: the transfer must go directly from one custodian to another. If the account holder withdraws the money and hands it over, the IRS treats it as a distribution — triggering income tax and penalties.

For Roth IRAs, the same trustee-to-trustee rule applies. The receiving spouse gets their own Roth IRA with no tax consequence, and the five-year aging clock for the transferred contributions carries over.

Defined Benefit Pensions: The Coverture Fraction

Traditional pensions do not have an account balance you can simply split. Instead, they promise a future monthly payment based on years of service and salary. To isolate the marital portion, Florida courts use the coverture fraction:

Coverture Fraction = Months of Service During Marriage ÷ Total Months of Service at Retirement

Suppose a spouse has 30 total years (360 months) of service and the marriage lasted during 18 of those years (216 months). The coverture fraction is 216 ÷ 360 = 0.60, meaning 60% of the monthly pension benefit is marital.

The non-employee spouse's share is then typically 50% of the marital portion:

Monthly Share = 50% × (Coverture Fraction × Total Monthly Benefit)

There are two approaches to dividing a pension:

• Deferred distribution: wait until the employee spouse starts collecting retirement distributions, then split each monthly check according to the coverture formula. The non-employee spouse receives payments for the rest of the employee spouse's lifetime (or their own, depending on the order).
• Immediate offset: assign the present value of the marital pension share to the employee spouse, and offset it by giving the non-employee spouse an equivalent value from other marital assets (more of the house equity, more of the 401(k), etc.).

Each approach has trade-offs. Deferred distribution preserves the pension's value but ties the non-employee spouse's retirement income to the other spouse's decisions. Immediate offset provides a clean break but requires an actuarial valuation to determine present value — and gets the offset wrong if the assumptions are off.

Florida Retirement System (FRS) Pensions

If either spouse is a Florida state or local government employee, their FRS Pension Plan has its own rules. Division requires an Income Deduction Order (or an acceptable state-level division order), not a federal QDRO.

FRS pensions are particularly restrictive. The division order must explicitly address survivor benefits and the Deferred Retirement Option Program (DROP) if applicable. Missing these provisions can leave the non-employee spouse with nothing if the employee spouse dies.

Military Pensions

Military retirement pay is divided through a specialized order submitted directly to the Defense Finance and Accounting Service (DFAS). The 10/10 Rule applies: DFAS will only pay the ex-spouse directly if the marriage overlapped at least 10 years of creditable military service. If the overlap is shorter, the employee spouse must make payments directly — a less reliable arrangement.

The Double-Dipping Warning

The Florida Supreme Court's Diffenderfer v. Diffenderfer decision warned against counting a pension as a marital asset for equitable distribution and then counting the same pension payments as income when calculating alimony. That would be double-dipping — the same dollars penalized twice.

This matters for settlement negotiations. If the non-employee spouse is receiving a share of the pension through a division order, those same pension payments should not be used to inflate the other spouse's apparent income for alimony purposes.

Organizing Your Retirement Accounts

The Florida Divorce Financial Split Guide includes worksheets for cataloging every retirement account, identifying the marital portion, and calculating the coverture fraction — the preparation a QDRO specialist or attorney needs before they can draft your division order.

See more Florida guides →