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Specialty tag(s): Divorce, Property Division

Divorce and Retirement Accounts: What Happens to Your Retirement Account in a Texas Divorce?

Jack Wall | May 22, 2025

Retirement assets are often the largest asset in a marriage. So, understanding the effect of divorce on them is essential. In Texas, these accounts may be divided to ensure a fair outcome for both spouses.

How Are Retirement Accounts Divided?

Retirement accounts are often split equally, but the court can split them disproportionately based on each spouse’s unique circumstances. The reason is that Texas courts must divide community assets in a “just and right” manner. Although “just and right” typically means a 50-50 split, it could mean a disproportionate split depending on the circumstances.

If you want to keep 100% of your retirement account, you may need to give up other assets of equivalent value to equalize the property division. A Texas family law firm like Goranson Bain Ausley can help you achieve a fair and equitable division of assets in your case.

Is a Divorce Decree Enough to Divide My Retirement Account?

If your retirement plan is employer-sponsored, then most likely no. You will likely need an order called a Qualified Domestic Relations Order (QDRO). The reason is that employer-sponsored plans are “qualified retirement plans” under the Employee Retirement Income Security Act and the Internal Revenue Code. So, a special order in addition to the decree is required to divide them.

A QDRO allows the plan administrator to divide a retirement account and distribute funds to the non-employee spouse. Without this specific order, the plan administrator cannot legally transfer funds, even if the divorce decree states otherwise. A Texas family law attorney can help you draft and submit the QDRO and coordinate with your financial institution to ensure everything is handled correctly.

What About Individual Retirement Accounts (IRAs)?

QDROs are not typically required to divide IRAs. A well-drafted divorce decree combined with the proper paperwork from the financial institution is usually all that is required.

Is There a Tax for Rolling Over Assets From One Retirement Account to Another?

Generally, no. However, there may be tax consequences for withdrawing the funds after they have been transferred. Because tax laws change frequently, it is important to consult with your Texas divorce lawyer and a qualified accountant to minimize your liability. Working with these professionals is especially important in gray divorce cases because people closer to retirement age may face complex financial consequences.

Contact a Family Law Attorney in Texas for Advice on Divorce and Retirement Accounts

Goranson Bain Ausley helps clients protect their financial future through personalized legal strategies. If you are concerned about how your retirement account will be divided and the potential consequences, an experienced attorney at our firm can guide you through every step. Contact us today to speak with a knowledgeable Texas family law attorney like Jack Wall.