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Property division: Important issues regarding IRAs

There is one age group in Texas and beyond that has been filing for divorce at a greatly increased rate over the past two decades. People who are ages 55 and older are in this group, and many of them have determined they would rather start afresh on their own in life, even at an older age, than stay in unhappy marriages. Property division is often a complex topic in later-in-life divorces, especially regarding taxes and Individual Retirement Accounts.

If one or both spouses tapped into IRA assets through a 72(t) distribution, trying to split the remaining assets between spouses in divorce can be quite complicated. Such situations often spark challenges, such as how to avoid modification when splitting an account from which 72(t) payments are being made. IRAs are not part of qualified domestic relations orders but are still subject to division in divorce proceedings.

Penalties of 10% for early withdrawal remain in effect when an IRA is split as part of a divorce decree. Therefore, if a receiving spouse taps into the assets transferred into his or her new account before he or she reaches age 59 1/2, such penalties would likely apply. However, if the spouse in question is beyond the specified age or meets another exception, penalties may be avoided.

It can take a year or longer for a concerned Texas spouse to resolve all property division issues regarding IRAs or other retirement assets or tax implications in divorce. Relying on experienced legal support is the way to go if one hopes to resolve the issues in an appropriate and timely manner. Especially if time and keeping costs low are high priorities, then acting alongside the guidance of an experienced family law attorney can help accomplish one's goals.

 

 

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