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Berks County Divorce Law Blog

Avoiding penalties with retirement account division in divorce

Early withdrawal of retirement funds from any tax-sheltered account typically results in a tax penalty. However, there are ways around this during a divorce in Pennsylvania. Current and former federal workers may have a Thrift Savings Plan, which is treated differently from an IRA, 401(k) and other private sector accounts. After a couple or the court decides to divide funds stored in a TSP, certain language will have to be included in the final settlement.

There is no national law forcing division of retirement assets, and couples in a high-asset divorce may choose to trade interests in real estate and various accounts instead of splitting everything right down the middle. If the court or the couple does decide to divide a TSP, they must establish a Retirement Benefits Court Order in the settlement to avoid a 10 percent tax penalty.

Closing joint bank or credit card accounts

If Pennsylvania residents want to close a joint bank account, they may be wise to get permission from the joint account holders. Good communication prior to closing the account may reduce the possibility of a misunderstanding as to where the money goes. When a couple has a joint account and decides to end their marriage, it will likely be necessary to split the money.

This is because money inside of a joint account belongs to both parties. In most cases, an individual will be required to close the account in person, but it may be possible to fax or email such a request to a bank or credit union. Closing the account is generally as easy as showing a valid photo ID and filling out a request form. If the account is used to pay any bills, it may be a good idea to cancel any payments that are pending.

Without children, who should keep the house after a divorce?

When you and your spouse choose to divorce, it can often seem overwhelming to suddenly face the many issues divorce presents. If you find yourself feeling this way, don't worry — you're not alone. Many couples have trouble connecting the dots between understanding it's time to end the marriage and actually finalizing the divorce.

One of the most common issues that can hang up a divorce is a marital home. For the vast majority of couples who choose to divorce, a marital home is by far the largest asset they have to their name.

Child support calculators do not include all circumstances

Pennsylvania parents who are considering a divorce might be thinking about how much child support they or their spouse will pay monthly. If they choose to look up the amount using a child support calculator worksheet that corresponds to state laws, they might find later on that a judge will order a different monthly payment amount.

Judges take things into consideration that child support worksheets do not. For example, a judge might choose to include extra expenses in the monthly payment such as emergencies, tuition, day care or special health care a child may need. Even if judges do not include these expenses, they might not come to the same conclusions as parents who are paying child support regarding how much time they spend with their children. The amount of time parents spend with their children is a significant factor in the calculation of their child support payment.

What to do with a house during a divorce

Some Pennsylvania residents who are getting a divorce might want to try to keep the family home. Often, this may be for emotional rather than practical reasons, and doing so may not be financially feasible. There are a number of factors that should be considered including the home's value, whether the person is employed, and whether the person can refinance or buy out the other party.

The house may need to be refinanced, or the person who keeps it might need to reapply for a mortgage. However, there are limits on certain types of income and whether they can be used to obtain a mortgage. For example, if the person is getting alimony, it may be several months before that can be counted as income. Other types of income, such as bonuses, commissions and pay from part-time work, might take a while to approve as well.

Child support modification made easier

In Pennsylvania, separated parents can modify child support payments due to circumstances such as loss of income or change in marital status. To establish a child support modification, it is necessary for both parents to agree to the new terms, and a judge has to order the change. While this is a complicated process, there are a few tips that can help make requesting a child support modification a bit easier.

As soon as financial circumstances change, it is necessary to act quickly to get the required child support payment reduced. While the modification is being processed, all current child support payments will remain the same, and there is no way to lower payments that were due prior to the implementation of the modification.

Divorce and 401(k)s

Pennsylvania residents who are considering getting a divorce should know what could happen to their 401(k). Although the retirement plan is offered to employees and is not considered a joint asset, it can be divided between employees and their spouses, even if the plan predates the marriage. However, this is only possible if certain criteria related to the Internal Revenue Code and the Employee Retirement Income Security Act of 1974 are met.

Federal law typically does not allow 401(k)s to be assigned to someone other than the intended recipient, but it does allow an alternate payee. The processes to do this have to be in compliance with ERISA, and then distributions to a spouse can be ordered by a family court.

Relocating with your child after divorce is possible

Depending on your child custody arrangements, it may be difficult to move and still see your child. If you have primary custody, you may not be allowed to move because it would make it difficult for the other parent to see your child.

Life changes, though, and a move might be necessary. What happens if you are offered a job or need to move for more familial support? Fortunately, there are a few options for people in your situation.

About same-sex marriage

After a groundbreaking ruling that was issued by the United States Supreme Court on June 26, 2015, same-sex couples in Pennsylvania and the rest of the country had a constitutional right to get married. The ruling was partly based on how the Court interpreted the 14th Amendment. The Court determined that allowing only heterosexual couples to get married was in violation of the constitutional right for equal protection according to the law.

Including the United States, there are over 20 jurisdictions or countries where same-sex marriage is legal. The Netherlands was the first to do so in 2000. Support for same-sex marriage has increased among the American public over the past 10 years. Fifty-four percent of Americans were against same-sex marriage in 2007, while 37 percent supported it. According to a survey conducted by the Pew Research Center, 62 percent of Americans now support legal marriage for gays and lesbians, while 32 percent are in opposition. The issue causes divides within individual demographics, even as support has increased overall. Among the various religious affiliations, the difference are especially stark. Eighty-five percent of Americans with no religious affiliation support same-sex marriage. Sixty-eight percent of white Protestants favor the marriages, while just 44 percent of black Protestants and 35 percent of white evangelical Protestants are in favor.

Why parents should strive for shared parenting

In Pennsylvania and other states, divorce courts are slowly beginning to favor shared parenting agreements after couples who have minor children decide to end their marriage. Even though advances in shared parenting has been made, U.S. Census data still shows that in the vast majority of cases courts still give the mother physical custody. Although this can be frustrating for fathers, there are reasons they should not give up getting the parenting time they need and deserve.

One reason that fathers should continue to fight for shared parenting is because, although this type of arrangement is still uncommon, changes are occurring. In Pennsylvania, for example, joint custody is recognized as a viable option for two parents going through a divorce. Other states are also in the process of enacting shared parenting laws. Further, there is evidence that shows that shared parenting is in the best interest of most children when their parents can no longer be together.

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