Close Window X
Rowe Law Offices, P.C.
Call today to schedule a free consultation
610-816-0935 866-232-1913

What to consider when splitting an IRA in a divorce

Pennsylvania residents and others who have an IRA may have to give a portion of its proceeds to a spouse in a divorce. In most cases, splitting an IRA is an easy process to complete. However, this may not be true if an individual has opted to take scheduled annual payments before reaching age 59.5. Those who opt for 72(t) distributions can access money in their IRAs without having to pay a penalty.

However, once a payment schedule has been created, it is typically not possible to modify it until a person reaches age 59.5. If the payment schedule is modified, an individual will likely need to pay the 10% early withdrawal penalty on any funds that have been distributed. Furthermore, individuals may face an additional penalty for failing to pay the early withdrawal fee in the correct year. To complicate matters for those who are attempting to split an IRA in a divorce, the IRS doesn't specifically say what a modification is.

Therefore, it is a good idea for individuals who have taken 72(t) distributions to work with a financial adviser to determine what they should do. Avoiding fees and penalties may help to preserve an IRA's current balance, which can be ideal for those who are 50 and over and looking to retire in the near future.

An attorney may be helpful for those who have questions about dividing marital property during a divorce. Even if a couple has a prenuptial agreement, they may need to be careful about how retirement accounts and other assets are divided. In some cases, it may be a good idea to hold off on actually reallocating funds in an IRA until it becomes easier or otherwise financially advantageous to do so.

No Comments

Leave a comment
Comment Information

Have Questions? Get A Free Case Review

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Email Us For A Response

Wyomissing Office
1200 Broadcasting Road
Suite 101
Wyomissing, PA 19610

Phone: 610-816-0935
Wyomissing Law Office Map

Lancaster Office
8 N. Queen Street
Suite 1102
Lancaster, PA 17602

Phone: 717-382-8360
Lancaster Law Office Map

Allentown Office
1248 Hamilton Street #201
Allentown, PA 18102

Allentown Law Office Map

Berks or Montgomery counties or the Lehigh Valley: 610-816-0935 Lancaster or York counties: 717-382-8360 Schuylkill County: 570-362-6837 Toll Free: 866-232-1913