HOLLYWOOD, Florida. Dividing assets is one of the toughest issues divorcing couples will need to resolve. While many couples can divide assets equitably and without the need to go to court, it is important to be properly informed about the requirements you’ll need to follow in order to divide your IRA account. According to Forbes, even if your divorce is low-conflict, it can be wise to seek the advice of a divorce lawyer in Hollywood, Florida, like the Law Offices of Jodie Bassichis, P.A. Failing to take proper steps when dividing your IRA, for example, can lead to high tax penalties—in some cases, to penalties as high as 10%. For some individuals with IRAs that have higher balances, or even mid-range balances, these penalties can be in the thousands of dollars. For those stuck with the tax bill, what may have seemed like an equitable divorce at the outset turned out to be an imbalanced deal. It is important to understand the proper process for dividing retirement income and assets in order to avoid costly mistakes.
According to the IRS, if you and your ex have a joint IRA, it is possible to divide the IRA. However, IRA plans generally incur large penalties for early withdrawal, so how you withdraw or choose to divide your IRA is incredibly important to avoid penalties. In most cases, couples will need to have a Qualified Domestic Relations Order filed in order to withdraw from the IRA without penalty. The paperwork splits ownership of the plan that allows each person to get access to their share of the plan. However, the paperwork involved with splitting an IRA can be complicated and the IRS recommends that divorcing couples seek professional advice when making these changes to their IRA.
The laws governing how much each person may be entitled to receive will depend on when the IRA was started. For instance, if you and your spouse started your IRA after your marriage began, then your IRA will generally be divided 50/50. However, if one person had the IRA before the marriage began and the other spouse joined the IRA after, then the division of assets in the IRA will depend upon how long the other spouse was part of the plan.
Another issue that can arise is when one partner offers ownership of an entire IRA in exchange for other assets. It is important to consider the tax burden of an IRA before making any such deals, because the face value of an IRA may be lower after tax withdrawals are accounted for. A qualified divorce lawyer can help you understand the value of your assets and find a plan that is equitable and fair to both parties.
Divorce is both a legal and a financial process. It is also an emotional one. Having a Hollywood, Florida divorce lawyer on your side can protect your rights as you make some of the tough financial and personal decisions that will impact your life for years to come. Visit our family lawyers at http://floridadivorcesource.com/ to learn more about our services.