Florida Divorce: Deferred Compensation, Profit-Sharing Plans, and Other Complex Benefits
Under a deferred compensation plan, a portion of an employee’s total pay is “withheld” until a pre-specified future date. Often, but not always, the benefits will not be disbursed until an employee’s retirement. In the modern business, more and more high ranking executives receive a larger and larger portion of their overall salary through some form of deferred compensation package.
If you or your spouse earned deferred compensation benefits and you are getting divorced, it is crucial that you know how to protect your rights. You deserve your fair share of the marital assets. Here, our Broward and Palm Beach County high asset divorce lawyers discuss the most important things you need to know about deferred compensation and other similar financial benefits.
All Marital Assets are Subject to Equitable Distribution
Under Florida law (Florida Statutes § 61.075), marital property is split in an equitable manner. To be clear, all marital assets are subject to property division, including deferred compensation and not-yet disbursed retirement benefits. If compensation has been earned, it is subject to distribution during a marital separation.
One of the many challenges facing high net worth couples is dealing with these especially complex financial assets. As a starting point, couples need to ensure that all deferred benefits/retirement benefits are carefully identified. They must be properly accounted for in a divorce settlement. Some notable examples of complex assets or benefits that you should consider include:
- Deferred compensation plans;
- Excess Benefit Plans (EBP);
- Top-Hat Plans (THP);
- Supplemental Executive Retirement Plans (SERP);
- Profit sharing plans;
- Defined contribution plans, including IRAs and 401(k);
- Pension benefits; and
- Life insurance benefits.
You Likely Need a Qualified Domestic Relations Order (QDRO) to Divide Deferred Compensation and Retirement Benefits
Splitting up retirement assets and deferred compensation benefits can be logistically challenging. As a general matter, you need to obtain a QDRO in order to effectively do so. A QDRO is a judicial order that can be used to establish a spouse as an alternative recipient of deferred compensation/retirement benefit.
In other words, through a QDRO spouse can get access to these future benefits without getting hit with additional taxes or early surrender penalties. For high income couples in Florida, a QDRO is often a key tool that allows the parties to reach a reasonable divorce settlement. Without a professionally prepared QDRO, you may not be able to split certain financial assets or benefits without incurring major penalties—worse yet, you may not be able to divide them at all. Do not leave money on the table.
Call Our Broward and Palm Beach County High Net Worth Divorce Attorneys for Immediate Assistance
At Williams & Varsegi, LLC, our Boca Raton and Coral Springs divorce lawyers provide top quality, solutions-focused representation to our clients. If you have questions about deferred compensation, profit-sharing plans, retirement savings, or other complex financial assets, we can help. For a confidential divorce consultation, please contact us now. We handle divorce cases throughout the surrounding communities in Broward and Palm Beach Counties.