Splitting an IRA in a divorce
The holidays have passed, the cold of January is settling in and tax season is rapidly approaching. January is also said to be the month when there are more divorce filings than at other times of the year. This can be an issue in particular for older couples who may be contemplating a divorce. As one nears retirement age in Oklahoma, thought must be given as to how best to handle retirement accounts and the tax implications of divorce on those accounts.
IRA accounts may be among the accounts that a divorcing couple need to divide in asset distribution. If both parties are over age 59½ and have not taken any distributions from the accounts the process is straightforward. But if early withdrawals, known as 72(t) distributions, have been made, the situation can get a little more complex.
Life has a way of throwing one curve balls and such occurrences may have necessitated early withdrawals from IRA accounts. Early withdrawals are subject to taxes and a 10% penalty. Early withdrawals can also affect the division of the IRA accounts in a divorce proceeding. The IRS has not published clear guidelines as to how such a situation is to be resolved.
Anyone in Oklahoma who is contemplating divorce and finds oneself in such a situation with an IRA account may benefit from the counsel of an experienced family law attorney. An experienced lawyer can review the details of the situation and advise the client on the available options. Asset distribution can be complex and experienced legal advice can simplify the process and may help to reduce tensions and stress that can result from the situation.