When Florida couples head toward divorce, the issue of how to handle retirement accounts can often be contentious and difficult. In fact, in a 2016 survey of divorce attorneys, 62 percent reported that retirement funds are the most troublesome issue faced by their clients as part of the end of their marriage. As these accounts often represent the largest single asset of the couple and are critical to both parties’ financial futures, this can come as no surprise.

However, the complex aspects of dealing with retirement funds during divorce are not limited to the difficulties in hammering out a suitable settlement on property division. There are multiple types of retirement accounts, and each is governed by a set of legal and financial regulations that make clear how a distribution should take place. When these rules are not followed, not only can the results be inequitable but also cost both parties significant amounts of money due to taxes, fees and penalties.

In order to effectuate the division of a retirement account based at one party’s workplace, a qualified domestic relations order or QDRO must be issued by the court. This document is necessary regardless of the type of plan whether it is a traditional pension or a 401(k). Despite the fact that it reflects the settlement in the divorce documents, a QDRO is not automatically issued by the court along with a divorce decree. If multiple retirement accounts are being distributed in the divorce, an individual QDRO is needed for each.

The lawyer representing one spouse as part of the divorce may draft the QDRO and have it approved by the court. In addition, a family law attorney might work directly with the plan administrator to oversee the distribution process and ensure that the property division agreement is being carried out accurately and effectively.