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Health & Fitness

Dividing IRA Assets- Do it right the 1st time

I’ve seen this situation in recent years: a couple who is already divorced requests a meeting because they disagree on what their divorce settlement actually says.

The problem typically arises when IRA assets are to be divided. Rather than simply split the specific accounts, I see divorce agreements reference payments from the wife to the husband from one source, then payments from the husband to the wife from another source. In a separate paragraph there may be yet another equalization of assets to be netted out from the final amount with references to various schedules in the agreement and the mention of payments “grossed up” for taxes.

These situations take hours of number crunching in order for me to figure out who owes what to whom. This is then followed by another meeting with the clients and multiple emails to explain it to both parties. Once we reach agreement the spouse who owes the money, let’s say the husband, submits the paperwork to his brokerage firm to transfer a portion of his IRA to an IRA that has been established for the now ex wife.

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And then … the brokerage firm rejects the transfer!

Why?  Because nowhere in the divorce agreement was it ever really clear what account was being transferred and how much was being transferred.

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The lesson in these situations is clear: When you are transferring IRA assets as part of the divorce process CALL THE BROKERAGE FIRM FOR INSTRUCTIONS. Explain the situation and ask them what specific paperwork they will need to transfer an IRA from spouse “x” to spouse “y”. Ask what language needs to be in the agreement to facilitate this transfer. Does the specific account need to be referenced by account name and number? Do they need a specific amount or will a percentage be acceptable?

Do it right the 1st time or you may find yourself going back to court to get a document signed by the judge in order to complete the transfer.

More information about Senes & Chwalek Financial Advisors can be found at www.senesandchwalek.com.  Senes & Chwalek Financial Advisors has offices in Concord and Harvard, Massachusetts.  Views and opinions expressed are those of Renee W. Senes and David Chwalek and are subject to change based on market and other conditions.  The information provided is general in nature and should not be construed as tax or investment advice. Consult your investment professional regarding your unique situation.

Renee W. Senes and David Chwalek are Registered Representatives and offer securities through Investors Capital Corporation, Member FINRA, SIPC

Advisory Services are offered through Investors Capital Advisory Services, 6 Kimball Lane, Lynnfield, MA  01940  (800) 949-1422

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