Whether one’s marriage has been a traditional or non-traditional one, the divorce process can be challenging — particularly when it comes to dividing assets. Certain assets may not be easily split. Thankfully, those in Massachusetts who are going through the dissolution process can turn to their family law attorney for assistance.
One example of a difficult asset to split is the individual retirement account. First off, the account owner may not believe that money should be on the table and subject to division, but generally it is. Secondly, how it is split matters.
There are two ways that both parties can avoid having to pay taxes and fees when splitting an IRA — first is by keeping the money in retirement accounts. If the receiving party does not have an IRA, one can easily be set up so that the money can be transferred directly to it. The second is by seeking a QDRO if the money will not be put back into an IRA. Sometimes, this money is used to pay alimony and child support, or the receiving party would rather take the cash now instead of investing it in an IRA. Without a domestic relations order signed by a judge, accessing funds for these purposes could result in one or both parties having to pay hefty taxes and fines.
No one wants to be stuck paying the penalties associated with an early IRA distribution just because it was not handled properly during divorce proceedings. It is an expense that many cannot afford during an already trying time. With assistance from a family law attorney, divorcing couples in Massachusetts can divide such assets the right way.
Source: thestreet.com, “How Divorce Affects Social Security and Retirement Accounts“, Robert Powell, Dec. 15, 2017