In a divorce, an IRA is often one of the biggest marital assets. Even if the IRA is in one party’s name, it is typically a marital asset to be divided as part of the case. In the state of Oregon, there are laws for how to split an IRA in a divorce.
Dividing an IRA in a divorce
In family law, marital assets are split equitably in a divorce proceeding, assuming there is no prenup. An IRA must be valued before it can be divided.
Each party may receive half of the IRA, or there may be another way to divide the funds. One party may be awarded a larger share of the IRA while the other party receives an offset of other property. Oregon uses an equitable distribution system in order to determine how to divide all marital property, including the IRA.
Paperwork to divide an IRA
Once the parties have a court order to divide the IRA, they may execute the transfer of the funds. There is specific paperwork that the parties must execute in order to move funds from one account to the other. The court order typically requires the parties to cooperate to complete this paperwork. The parties execute the required division order and submit it to the institution that manages the IRA.
Generally, the funds are transferred to a new IRA that is established for that party. It’s important to note that there may be penalties to withdraw funds. If a party plans to withdraw funds from an IRA, they must be sure to draft the court order carefully to ensure that it’s clear which party pays the withdrawal fees.
Understanding IRAs in divorce
An IRA is an important part of any divorce case. Either party may receive funds from the IRA based on principles of equitable division in Oregon law. An attorney may help their client understand IRA distribution in a divorce and work effectively to help them receive an equitable share of the assets.