How does divorce affect retirement accounts?
How does divorce affect retirement accounts?
Divorce is one of the times you can access your IRA or 401(k) before retirement and pay no tax. This happens if the judge assigns part of your account to your spouse in the divorce settlement. You spouse may receive some, all or none of your retirement account, depending on your situation.
Is an IRA part of a divorce settlement?
IRA funds can be transferred tax free from one spouse to the other only if allowed under a court-approved divorce decree or legal separation agreement. Generally, IRAs are included in property settlement agreements between married couples who divorce.
How is an IRA divided in a divorce?
The correct way to divide IRA funds in compliance with a divorce decree is to do a trustee-to-trustee transfer (a direct transfer) of the IRA funds, moving them directly from one spouse’s IRA to the other spouse’s account. If done correctly, the IRA will be split and there will be no tax liability for either spouse.
Is an ex spouse entitled to an IRA after divorce?
Divorce and IRAs If your divorcing spouse receives a court order, you might have to transfer your IRA to your spouse. You can do this via a direct transfer to your spouse’s IRA or by retitling your IRA in your spouse’s name. In either case, the transfer is tax-free.
