Saving for retirement is not something that happens overnight. Most people in Texas spend decades putting away money for later in life, but divorce can disrupt even the most carefully planned retirement. Regardless of a person’s age when filing for divorce, it is important to be aware of how retirement savings are handled during divorce. Otherwise, protecting future financial security during retirement may be much more difficult.

Even if a couple’s retirement savings is only in one person’s name through his or her employer, the account is generally still community property. However, a person cannot simply withdraw the amount allotted to him or her during the divorce without incurring penalties and paying taxes. To avoid losing a portion of retirement savings to these extra costs, a couple should be certain to obtain a qualified domestic relations order, or a QDRO. This allows a person to legally transfer money out of a retirement account with incurring any penalties.

Depending on the situation, it might not even be necessary to divide the funds within a single retirement account. If both spouses worked during the marriage and saved roughly similar amounts separate retirement accounts through their individual places of work, they could choose to keep their own accounts and avoid the need for a QDRO altogether. This does not mean that each person’s account was separate property, but that the couple could choose to divide their marital property — the retirement accounts — in an easier manner.

Most people will need to adjust their plans for retirement after a divorce. Whether this means creating a new savings plan or setting their sights on living in a different area of Texas, those changes are often rooted in the decisions made during divorce. With so much on the line, it is important for divorcees to take property division and retirement seriously.