Dividing property is a major aspect of bringing a marriage to an end. It can be one of the more contentious aspects of the process and also one that individuals pay the most attention to. Focus can be immensely important as dividing a complex asset may need specific action in order for Texas residents to avoid financial pitfalls.
In particular, dividing retirement funds needs special considerations. With an IRA, divorcing or legally separated parties can divide the funds in these accounts without taxation or penalty as long as they have a decree of divorce or of separate maintenance. Without this legal information provided, it is possible that any transfer or withdrawal of funds could be subjected to fees and taxes that the original owner of the funds may be responsible for.
The manner in which the money is transferred is also important. Parties may benefit from considering one of two main options. One way to transfer the funds involves having the name changed on the IRA from the current account holder to the name of the spouse entitled to the funds. Another way to move funds and avoid penalty is to have the funds transferred from one IRA to the receiving party’s IRA.
An IRA may only be one complex asset that needs dividing during a Texas divorce. Fortunately, individuals can assess their particular assets and determine what property may need close attention. Parties may also want to work with their legal counsel to determine what strategies could help them work toward the outcomes they hope to achieve.