|
Dividing IRA Assets Upon Divorce
Ken Morris
DIVIDING IRA ASSETS UPON DIVORCE
For many families, a significant portion of their wealth may be located within the couple's individual retirement accounts (IRAs). Should the family unit break down, it is therefore important to have an equitable and easy method to divide and transfer assets. Division of retirement assets can be a sticky problem when left to the court system. Yet, once a decree of divorce or separate maintenance is entered, the transfer of IRA assets from one spouse to another should not add further difficulty.
When an interest in an IRA is to be transferred from one spouse to another under a court decree, the Internal Revenue Service has attempted to facilitate as easy a transfer as possible. This accommodating position is most likely in response to the level of divorce in today's society. In general, the transferred interest in the IRA is viewed as the recipient-spouse's property and, therefore, this conveyance is acknowledged as tax-free. The IRS also offers two basic transfer methods to help during such a trying time.
The most common method is the direct transfer. The IRA owner-spouse may order the IRA trustee to transfer the necessary IRA assets directly to the trustee of a new or existing IRA in the name of the recipient-spouse. Another alternative is to transfer the assets the owner-spouse is entitled to keep into another IRA, leave the necessary amount in the old IRA for the recipient-spouse and change the name on this old IRA to that of the recipient.
This renaming method taken to its extreme is the second alternative recognized by the IRS. If all the assets in the owner-spouse's IRA are to be transferred to the recipient-spouse, a simple method of transfer is to just change the name of the account on the records of the financial institution. Sounds easy enough.
Given the inherent reporting problems, the sixty day rule, and the sometimes emotional environment of marriage dissolution, IRA rollovers are generally not permitted. Direct transfers by trustees are most often recommended. Of course, the most viable alternative will depend upon the particular situation and should be chosen with the advice of an attorney and financial advisor.
"Can somebody please help me watch, manage, invest or oversee my 401k" is the question Mr. Morris hears most often that causes him the most concern. Fearing the American worker is being left in the dark, Mr. Morris, a fee based Investment Advisor Representative, based in Central Ohio, with Raymond James Financial Services, Inc., helps 401k participants get the most out of their retire
|
- New for 2006, the Roth 401k Plan
One of the new tax strategies available in 2006 is the Roth 401k. A taxpayer may place up to $15,000 ($20,000 if age 50 or older) in a Roth 401k instead of a regular 401k plan in 2006. The 401k plan needs...
- The Four Stages of an IRA
Copyright 2006 Damon CliffordWith all these different names and terms being thrown around in the financial community, it can get very confusing on what something is, and what it is not. How many times...
- Roth 401(k) .. A Wolf in Sheep's Clothing
Starting on January 1, 2006, 401(k) plan sponsors may offer a Roth 401(k) option. Those employers who want to offer this new Roth 401(k) will need to revise their current 401(k) program Roth 401 (k) Overview:*...
- So you've never heard of a Roth Ira
Well I think this is one of the best retirement savings options allowed by the tax department. It is especially beneficial to middle income Americans, specifically those earning less than $95,000 per year.This...
- How To Purchase Real Estate Through An IRA
Buying real estate through an IRA can be a good option, for those uninterested in investing in the stock market. When considering using an IRA to invest in real estate, you have the option of houses, raw...
- Roth IRA Contributions
Confused about whether you can contribute to a Roth IRA? Try using these simple rules:IncomeTo contribute to a Roth IRA, you must have compensation (e.g., wages, salary, tips, professional fees, bonuses)....
- How To Purchase Real Estate Through An IRA
Buying real estate through an IRA can be a good option, for those uninterested in investing in the stock market. When considering using an IRA to invest in real estate, you have the option of houses, raw...
- IRA - Go Beyond Stock Market Investments
Owning a home is a good investment in the view of many people. If one is good, two must be better! Before you rush out to buy a second home, you might consider doing it through your IRA.The idea of buying...
- Convert To Roth IRA Regardless of Income - 2010
An odd quirk in the recent legislation to extend the Bush Tax Cuts is giving IRA holders a huge break. For one year, and one year only, the income cap will be gone. Convert To Roth IRA Regardless of Income...
|
| | |
