Multi-State Retirement Account Divorce Lawyers
In dividing marital property and debt in a divorce, the court has to accomplish an equitable division state. In equitable division states, the court looks at various factors while dividing marital property and debt.
Sometimes the parties are able to enter a comprehensive settlement in terms of the division of marital property and debt. But, in other instances, the court has to make a determination after a trial or hearing.
Retirement accounts and investment accounts can become critical issues. The parties in the divorce may have a Traditional IRA and a Roth IRA. The individuals are often torn into knowing which of these two assets would be best to request either at trial or in a settlement negotiation.
A party who is in this type of situation needs to consult their attorney who may advise the clients to consult a financial expert to help them make their decision. There are also scenarios where one party is able to choose one account over the other. The court could also ultimately divide the various accounts if given the circumstances.
What is The Difference Between Roth and Traditional IRAs?
However, it is important for parties to understand the difference between Traditional IRAs and Roth IRAs such that they can divide a strategy for their case.
- Roth IRAs can have a substantive advantage in that they allow for tax-free withdrawals after the age of 59 1/2. In other words, although the actual contributions are not tax-deductible, withdrawals at age 59 1/2 (or sooner in some circumstances) are generally tax-free as long as it has been in the account for at least five years.
- This contrasts with Traditional IRAs where taxes are paid when withdrawals are made even after age 59 1/2.
For this reason, many might consider seeking assets in a Roth IRA versus a Traditional IRA if this is a possibility for their case. After all, it would almost always make sense to seek a retirement account where fewer taxes will be owed when withdrawals are made. However, because property division is complex, it is important to discuss this matter thoroughly with an attorney and a financial expert.
Our firm’s webpage has additional information regarding property division, family law, and other related matters. You can read articles about family law, view informational videos, listen to our podcast, or download our mobile application.
Contact our Multi-State Property Divison Lawyers
If you need help with the division of retirement accounts in divorce, Stange Law Firm, PC can help. You can contact us online or call us at 855-805-0595.
