For many married couples living in Tennessee, the original commitment does not last. While there are many reasons that this could happen, what really matters is what happens next. Finances are always a top concern among those going through a divorce, and what to do with retirement accounts may be big question mark on the list.
Asset division will occur in an equitable way for those going through a divorce. For many, this includes dividing retirement accounts such as individual retirement accounts. IRA’s can exist for one or both spouses, and can be divided right down the middle or at different percentages that are appropriate for the asset division plan. How the accounts are split is dependent upon specific factors related to the asset division.
The thing with IRA funds is that they can be transferred tax-free from one spouse to another by a written divorce decree. However, if you are the recipient of IRA funds you can be held responsible for a 20 percent federal income tax unless you take appropriate steps to roll the accumulated IRA into your own personal IRA. There are many details like the one listed above that can determine how an IRA transfer affects one’s short-term and long-term finances. Financial professionals can help to explain and plan for how these rules affect an individual’s personal situation.
Each individual’s financial situation is unique. However, professional help may be available for individuals contemplating moving forward with divorce. With the right help, individuals in Tennessee may find that an equitable and appropriate division of assets can be a reality.
Source: FindLaw, “Divorce, Taxes and Estate Plan,” Accessed Dec. 14, 2015