How Do You Avoid IRA Early Withdrawal Penalties In A Divorce?
Distributing assets is one of the more complicated aspects of many divorce cases. On the list of challenges is dividing an individual retirement account, or IRA. In dividing interests in an IRA between the spouses, a major objective is to avoid IRA early withdraw penalties in a divorce. The most effective tool to use to avoid early withdrawal penalties on an IRA is what is known as a qualified domestic relations order. Calculate the increase in value of an IRA during the time of the marriage. In a community property state, that increase in value typically is divided equally between the spouses. In an equitable division of property state, the increase in value is based on a more vague standard of what is fair under the circumstances. Obtain a qualified domestic relations order from the clerk of the court. Most court clerk’s offices maintain standard forms for use in divorce cases, including a qualified domestic relations order, or QDRO form. (In conversation, a QDRO is referred to as a
