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Q: Divorce Law ( No Answer,   2 Comments )
Question  
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?
Answer  
There is no answer at this time.

Comments  
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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