Divorce and Your IRA

You and your spouse’s IRAs might be your biggest joint assets. Whether you have a traditional IRA or a Roth IRA, your retirement nest egg may be divided between you and your spouse in a divorce settlement. But many IRAs do not allow withdrawals until after a certain date. So how can you and your ex-spouse claim a portion of each other’s IRAs?

One option is to make the withdrawal even if it incurs a tax penalty. However, this raises questions about which spouse should pay the tax on the withdrawal. Another possibility is to roll over the funds from one IRA into another IRA, but this may have tax consequences as well. A third choice is to designate each other as payees on your respective retirement accounts. A divorce settlement can include language that allows both spouses to receive payments from the account when the funds become available for tax-free withdrawal.

When dealing with large sums of money and tricky tax restrictions, it is important to consider all your options. If legal formalities are not followed to the letter, the impact on your retirement plans could be devastating. A knowledgeable divorce attorney may be able to help you and your spouse divide the assets from your IRAs in a fair, legal, and logical manner.

Contact Us

If you have concerns about the status of your retirement accounts during a divorce, consult an experienced Oceanside divorce lawyer about your situation. At Fischer & Van Thiel, LLP, we are dedicated to helping couples end their relationships equitably and efficiently. Call us today at 760-722-7646 for more information.