Dividing Retirement Accounts in a Georgia Divorce

Under Georgia law, all contributions made by either spouse during the marriage to any retirement account – whether a 401(k), an IRA, or a pension – are subject to equitable division. The earning spouse can claim any pre-marital balance as separate – but the marital portion is divisible. Even unvested retirement funds in a pension are considered marital property subject to division. See, Courtney v. Courtney, 256 Ga. 97, 344 S.E. 2nd 421 (1986). Atlanta Divorce Attorney Russell Hippe has the experience necessary to help you deal with this often complex issue.

Prior to a divorce filing, you may think your retirement account interests are somehow protected from your spouse.  They are not.  However, although the non-earning spouse has a claim to these funds, the Court does not have to award any of the retirement funds to the other spouse if it would be otherwise equitable, considering the overall financial circumstances of the parties and the award of other assets, to award all of the retirement account to the earning spouse. See, Taylor v. Taylor, 283 Ga. 63, 656 S.E.2nd 828 (2008); citing Stanley v. Stanley, 281 Ga. 672, 642 S.E.2nd 94 (2007).

If the parties go to trial, the Judge will usually attempt to adjust the award of marital property such that the retirement accounts will not have to be divided.  The Judge can further award alimony in lieu of dividing a retirement account where the division of a retirement vehicle will be particularly complex, as in the case of unvested benefits for example. 

If a specific retirement account is divided, a separate Qualified Domestic Relations Order ("QDRO") usually has to be drafted. A QDRO is a legal order, approved by the plan administrator, that splits and changes the ownership of a retirement plan in accord with the final order.  A QDRO is required to divide any employee benefit plan or pension subject to ERISA.  It is customary for this order to be entered after the divorce is final. Mr. Hippe has drafted numerous QDROs. For more information on QDROs, see the United States Department of Labor's Frequently Asked Questions.

Settlement Tip:

When executing any settlement agreement, it is important that the parties understand, agree, and specifically state that the division will be a tax neutral transfer to a qualified retirement account designated by the receiving spouse. Otherwise, there are tax complications and the earning spouse could be charge a penalty.

The receiving spouse can open and designate a qualified IRA to accept the funds. Or, the receiving spouse can agree to have the plan administrator simply “parse out” an agreed liquidated amount or percentage interest to be held in a separate account within the plan.  This may turn on the rules, requirements, and restrictions of the retirement plan itself.  Any settlement agreement should so recognize and respect this possible condition.

Further Authority on Division of Retirement Accounts:

Retirement benefits acquired during the marriage are marital property subject to equitable division. Taylor v. Taylor, 283 Ga. 63, 656 S.E.2d 828 (2008). Amounts contributed to a retirement account by a spouse and his or her employer during the marriage is marital property subject to equitable division. See Payson v. Payson, 274 Ga. 231(1)(b), 552 S.E.2d 839 (2001).

Curran v. Scharpf, 290 Ga. 780, 782-83, 726 S.E.2d 407, 409-10 (2012).

Trial court was authorized, under federal statute governing survivor benefit plans, to require former husband to name former wife as the beneficiary of any survivor's benefits available as a result of his military service and, if he failed to do so, she was entitled to take the necessary steps to ensure his compliance. 10 U.S.C.A. § 1450(f)(4).

Hipps v. Hipps, 278 Ga. 49, 597 S.E.2d 359 (2004).