Quick answer: Retirement and inherited accounts behave differently from an ordinary brokerage account in a Florida divorce. With a premarital IRA, federal law caps how much new money can be added each year — usually a few thousand dollars — so the “marital funds were added” pathway is small or absent, and any marital claim on the growth rides almost entirely on whether a spouse actively managed the account. With an inherited or beneficiary (BDA) account, you generally cannot contribute at all; money only flows out through required distributions. That account is non-marital by origin (it came by inheritance), and absent active management, its appreciation stays non-marital — the result reached in Naranjo v. Ochoa (Fla. 4th DCA 2023). For both, the deciding question is effort, not deposits.
This is a spoke of the hub on calculating marital vs. non-marital appreciation, and the capstone to the coverture-fraction spoke — it explains the accounts where the coverture-fraction (marital-contribution) pathway usually does not drive the answer.
Two pathways, recapped — and why these accounts are special
Across this cluster, appreciation of a non-marital asset becomes marital under §61.075(6)(a)1.b by one of two routes: a spouse’s efforts during the marriage, or the contribution of marital funds. The coverture-fraction spoke handles the marital-funds route. Retirement and inherited accounts are special because that second route is structurally limited:
- IRAs can only receive new contributions up to an annual IRS limit (a few thousand dollars), and higher earners may be phased out of contributing to a Roth IRA entirely. So over a marriage, marital contributions to a premarital IRA are typically modest or zero relative to the account’s value.
- Inherited / beneficiary (BDA) accounts cannot receive contributions at all. The owner can only take distributions. Required minimum distributions move money out, not marital money in.
When the marital-funds route is small or unavailable, the analysis falls back on the efforts route — the active-management threshold covered in what counts as active management.
Premarital IRAs: the contribution pathway is capped, so effort usually decides it
For a premarital IRA, I run the same two-part analysis as any other account, but the weighting shifts. The marital-contribution piece is bounded by the IRS limits, so it is usually a minor line item — handled with a coverture-style apportionment on whatever marital contributions were actually made. The piece that moves the number is the efforts analysis: was the account passively held, or actively traded? If it was passively held in funds, Naranjo supports treating the appreciation as non-marital regardless of how much it grew.
Illustrative example (hypothetical, no client data): A spouse enters the marriage with a Roth IRA worth $200,000, makes no contributions during the marriage (above the income limit), and simply holds a diversified index portfolio. At the valuation date it is worth $360,000. Because no marital funds were added and there was no active management, the entire $160,000 of appreciation is passive — and stays non-marital. The result would change only if the owner had actively managed the account, which would shift the question to the efforts methods in the rate-of-return, buy-and-hold, and active-management spokes.
Inherited and beneficiary (BDA) accounts: non-marital by origin, money flows out not in
An inherited account starts from a stronger non-marital position than a premarital one. Florida’s equitable distribution statute treats property a spouse acquires by inheritance or non-interspousal gift as non-marital under §61.075(6)(b). So the account is non-marital because of how it was acquired, independent of the appreciation analysis.
Two structural facts then push hard toward a non-marital result for the growth as well:
- No contributions are possible. You cannot add new money to an inherited IRA, so the marital-funds/coverture pathway has nothing to attach to.
- Distributions flow out. Required minimum distributions, and the general drawdown posture of inherited accounts, move money out of the account — the opposite of a marital contribution.
That leaves active management as the only realistic route to any marital share, and Naranjo v. Ochoa is directly on point: there, the appreciation on inherited mutual funds that were bought and held was held non-marital because selecting and holding investments is not the “efforts of either party.”
Illustrative example (hypothetical, no client data): A spouse inherits an IRA worth $250,000 during the marriage, takes the required distributions each year, and does not trade the account. Net of distributions, it is worth $300,000 at the valuation date. The account is non-marital by inheritance, no marital funds could be or were added, and it was passively held — so the appreciation is non-marital. A separate question — whether the distributed cash was deposited into a joint account and commingled — is a tracing issue, not an appreciation issue, and I analyze it on its own track (see direct transactional tracing).
The tax-character wrinkle a balance statement hides
Here is a CPA point that a raw account balance conceals, and that matters once a marital share is being valued for distribution: a pre-tax (traditional) retirement dollar is not worth the same as a Roth dollar. A $100,000 traditional IRA carries an embedded future income-tax liability; a $100,000 Roth IRA does not. If the marital share of a pre-tax account is compared dollar-for-dollar against Roth or after-tax assets on the other side of the ledger, the division is not actually equal. When it is relevant to the assignment, I flag the embedded tax character so the values being compared are apples-to-apples. This is a valuation refinement, not tax or legal advice — the legal treatment of tax-affecting is the attorney’s and the court’s call; my role is to make the underlying numbers honest.
How this completes the cluster
This spoke closes the loop. The rate-of-return, buy-and-hold, and tracing methods quantify appreciation a spouse produced through effort. The coverture-fraction spoke handles appreciation the market produced on marital money that was added. Retirement and inherited accounts are the case where the second pathway is capped or impossible — so the analysis leans on the first, and on the threshold question of whether there was any qualifying effort at all. Identifying which account type you are dealing with, early, keeps the analysis pointed at the pathway that actually decides the case.
If you are an attorney handling a Florida divorce involving a premarital IRA, an inherited retirement account, or a beneficiary (BDA) account, Joey Friedman, CPA, P.A. prepares active-vs-passive appreciation and value-character analyses statewide.
Related resources
- Hub: Calculating Marital vs. Non-Marital Appreciation of Investment & Retirement Accounts
- The Coverture Fraction for Investment Accounts
- What Counts as “Active Management”?
Frequently asked questions
Is the growth on a premarital IRA marital in a Florida divorce?
Usually only to the extent a spouse actively managed it, or to the extent of any marital contributions made during the marriage. Because IRS limits cap contributions, the active-management question typically decides it; a passively held premarital IRA’s appreciation generally stays non-marital.
Is an inherited IRA marital property?
No — property acquired by inheritance is non-marital under §61.075(6)(b). Its appreciation also tends to stay non-marital, because you cannot add marital funds to it and, absent active management, the growth is passive (the result in Naranjo v. Ochoa, Fla. 4th DCA 2023).
Do required minimum distributions make an inherited account marital?
No. Distributions move money out of the account, not marital money in, so they do not create a marital contribution. What happens to the distributed cash afterward (whether it was commingled into a marital account) is a separate tracing question.
Why does it matter whether a retirement account is traditional or Roth?
Because a pre-tax (traditional) account carries an embedded future tax liability and a Roth does not, so equal balances are not equal value. When a marital share is being divided against other assets, that tax character should be accounted for so the comparison is fair.
By Joey N. Friedman, CPA, ABV, M.Acc, MIB — President, Joey Friedman, CPA, P.A.