IRA Divorce Rules

Former Military Spouse | July 23, 2014 | Military Divorce | No Comments

Divorce and Retirement Accounts Funds

Divorce Strategies for Individual Retirement Accounts (IRAs)

When your family is going through a military divorce and revieiwing the family finances, don’t forget about the retirement account funds, and especially any assets held for your children.
Planning financially for your children is an important part of any divorce and all retirement accounts (belonging to parents and children) play a role in the overall family financial stability.

Tips for divorcing parent retirement account funds:

Call each financial facility and ask about dividing the account in cases of divorce. In many cases, parents can divide an account under a court order for division of assets. Do not let your spouse say, “You keep yours and I’ll keep mine,” especially if yours happens to be the lower of the two accounts or the account with less growth potential.
In a case where an account cannot be split and you are looking for an equitable 50/50 split, negotiate carefully for an asset of equal value considering both current value and growth potential.

Dividing Child Assets in a Divorce

Divorcing parents should immediately look for ways to establish Roth Individual Retirement Accounts (IRAs) for their children (if they have not already done so).
Divorced parents will have twice the household expenses of a typical married family. Between these two signle parents are the costs of two rents/mortgages, two utility bills, and so forth.
This creates a financial strain.

If parents had trouble saving for college before, it becomes even more difficult after divorce.
Parents should try to take advantage of the savings potential and tax-free growth of a child roth ira.
The divorce decree may not include any text concerning college costs, so single parents may need to take advantage of all avenues for potential free aid when it is time to pay for college.

The two biggest advantages of a child roth IRA is the tax-free growth and the EXCLUSION from assets in the Federal formula for computing financial aid for college education.

The key to a Roth IRA for your child is earned income. If your children are already working, explore the option of opening a Roth IRA, not only to
secure their future retirement but also to shield family assets when it’s time to apply for colleges. If they are not working, you can employ them
as a household employee or encourage them to become an entrepreneur.
The Kid’s Roth IRA Handbook shares many ideas for earned income and provides all the tips needed to keep parents inline with IRS rules.

The Kid’s Roth IRA Handbook

Money Answers for Employed Children, Their Parents, and Self-Employed and Entrepreneurs

Inside this Individual Retirement Account book: