Divorce and your IRA, 401k, and Retirement Plans

<span></span> <p style="text-align:center;"><a rel="nofollow" href="http://www.erollover.com"><img src="http://knol.google.com/k/-/-/jktyd5jujhex/4k169q/01468x601.gif" alt="" height="60" width="468"></a></p> <span style="font-size:x-small;"><a rel="nofollow" href="http://www.erollover.com/index2.php?id=122"><strong style="color:#ff0000;">Sign up here for a chance to win </strong></a> <p><a rel="nofollow" href="http://www.erollover.com/index2.php?id=122"><strong style="color:#ff0000;">an Online and Print Wall Street Journal Subscription!</strong></a></p> </span> <p><br> </p> <p><a rel="nofollow" href="http://www.erollover.com">eRollover.com</a></p> <p><strong>Divorce and your <a rel="nofollow" id="KonaLink0" style="text-decoration:underline;" href="http://www.erollover.com/blog/ira/divorce-and-your-ira-401k-and-retirement-plans#"><span style="color:#009600 important;font-family:Arial, Helvetica, sans-serif;font-size:12px;">IRA</span></a> , <a rel="nofollow" id="KonaLink2" style="text-decoration:underline;" href="http://www.erollover.com/blog/ira/divorce-and-your-ira-401k-and-retirement-plans#"><span style="color:#009600 important;font-family:Arial, Helvetica, sans-serif;font-size:12px;">401k</span></a> , and <a rel="nofollow" id="KonaLink6" style="text-decoration:underline;" href="http://www.erollover.com/blog/ira/divorce-and-your-ira-401k-and-retirement-plans#"><span style="color:#009600 important;font-family:Arial, Helvetica, sans-serif;font-size:12px;">Retirement</span></a> Plans</strong></p> <p>I commonly get approached by individuals who are looking for advice on what their upcoming divorce means to their 401k, IRA, or other retirement plan. Divorces are tricky anyhow, but when you throw in tangible assets it opens up to a whole new dimension. Here are some brief details about what this means to your investments.</p> <p><span><strong>Can my IRA assets be awarded to my ex-spouse in divorce proceedings?</strong><br> Yes. IRA assets can be awarded to an ex-spouse in the course of a divorce settlement.</span></p> <p><span><strong>Can IRA assets be awarded as part of a legal separation agreement?</strong><br> Yes. In addition to being awarded in <a rel="nofollow" id="KonaLink3" style="text-decoration:underline;" href="http://www.erollover.com/blog/ira/divorce-and-your-ira-401k-and-retirement-plans#"><span style="color:#009600 important;font-family:Arial, Helvetica, sans-serif;font-weight:400;font-size:12px;">divorce </span><span style="color:#009600 important;font-family:Arial, Helvetica, sans-serif;font-weight:400;font-size:12px;">proceedings</span></a> , IRA assets may also be awarded to a spouse in the course of a <a rel="nofollow" id="KonaLink4" style="text-decoration:underline;" href="http://www.erollover.com/blog/ira/divorce-and-your-ira-401k-and-retirement-plans#"><span style="color:#009600 important;font-family:Arial, Helvetica, sans-serif;font-weight:400;font-size:12px;">legal </span><span style="color:#009600 important;font-family:Arial, Helvetica, sans-serif;font-weight:400;font-size:12px;">separation</span></a> .</span></p> <p><br> </p> <p><span><strong>What happens with IRA assets that are awarded to a former spouse in divorce proceedings?</strong><br> Typically, IRA assets that are awarded to a former spouse in divorce proceedings are transferred to an IRA established in the name of the former spouse. This type of direct transfer is often referred to as a ‘transfer incident to divorce.’</span></p> <p><span><strong>Are IRA assets that are transferred to a former spouse typically taxed at the time of transfer?</strong><br> IRA assets generally are not taxed at the time they are transferred from one spouse’s IRA to the IRA of a former spouse provided the transfer is made in accordance with a court-issued divorce decree or separation agreement.</span></p> <p><span><strong>Are IRA proceeds received in a divorce settlement exempt from the IRS 10% <a rel="nofollow" id="KonaLink5" style="text-decoration:underline;" href="http://www.erollover.com/blog/ira/divorce-and-your-ira-401k-and-retirement-plans#"><span style="color:#009600 important;font-family:Arial, Helvetica, sans-serif;font-size:12px;">early </span><span style="color:#009600 important;font-family:Arial, Helvetica, sans-serif;font-size:12px;">withdrawal </span><span style="color:#009600 important;font-family:Arial, Helvetica, sans-serif;font-size:12px;">penalty</span></a> that typically applies to taxable distributions taken prior to age 59½?</strong><br> No, there is no special exception to the 10% early withdrawal penalty for IRA proceeds that are awarded to you as a former spouse in a divorce settlement. Once the awarded IRA assets have been transferred to an IRA in your name, you are typically subject to the normal IRA rules governing distributions, taxes and penalties.</span></p> <p><strong>Please visit our site for more Retirement, 401k, and Insurance information:</strong><br> <a rel="nofollow" href="http://www.erollover.com">www.erollover.com</a></p>