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Subject:
Divorce Law
Category: Relationships and Society > Law Asked by: dhb38-ga List Price: $7.50 |
Posted:
14 Apr 2005 13:37 PDT
Expires: 14 May 2005 13:37 PDT Question ID: 509316 |
In Pennsylvania, does an Individual Retirement Account that someone has prior to their marriage get split upon divorce? What about the interest that grows during the marriage? |
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There is no answer at this time. |
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Subject:
Re: Divorce Law
From: jack_of_few_trades-ga on 14 Apr 2005 13:53 PDT |
It might be split. "IRA assets may be divided (or awarded to the spouse of the IRA owner) in accordance with a court-approved divorce decree or legal separation agreement. This division is treated as a non-taxable transaction, which could be a transfer or rollover, depending on the financial institution. The spouse who receives the assets (referred to as "former spouse") is required to treat the assets as his or her own and is responsible for adding any subsequent distributions into his or her income for the year the distribution occurs. Should an individual give IRA assets to a former spouse without receiving a court-approved divorce decree or separation agreement authorizing the change in ownership, the individual will be required to include the amount in income, that is, treat the transaction as a distribution to him/herself." http://www.investopedia.com/articles/retirement/03/060403.asp That has some tax advice as well (wait for the court order before splitting the IRA and be sure you don't do anything wrong that will cause you to pay the 10% early withdrawal penalty). |
Subject:
Re: Divorce Law
From: cynthia-ga on 14 Apr 2005 14:05 PDT |
see this page: DIVORCENET - Pennsylvania - Tax Implications of a Divorce and Support http://www.divorcenet.com/states/pennsylvania/paart_19 ..." Retirement Funds Often, retirement accounts are the second largest marital asset. Tax laws regarding qualified retirement plans like 401Ks are very strict and govern not only who receives the distributions, but also how they are handed out. When divorce occurs, your ex-spouse may be entitled to some portion of your retirement plan. Divorcing couples must usually draft a Qualified Domestic Relations Order (QDRO). When written in accordance with the laws, the QDRO allows the ex-spouse the same distribution that they would have received if still married to the plan owner. IRAs function somewhat differently than qualified plans. If there have been contributions during your marriage, your spouse will have rights to some of the IRA assets. Such assets can be transferred tax-free by a written divorce decree. If you are the recipient of transferred IRA assets, be sure to have the funds rolled immediately into your own IRA. If you don't, you could be hit with a 20 percent withholding penalty for federal income tax. ..." |
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