Divorce and the 72t
L1: Divorce and the 72tI am 57 andjust starteda 72t distribution that will end when I turn 62. I am also going thru a divorce. My question is as follows: When splitting the IRA, how is the 72t distribution effected. Would I need to get a provision in the divorce decree that states that X number of dollars are being transferred to a new account in my wife”s name. Does this substantiate a modification?..Do I pay a penalty on what I have withdrawn to date and start a new 72t on my portion? She may elect to bag the 72t distribution on her end and put her money elsewhere…Help is appreciated.ThanksMick2008-06-10 08:05, By: Mick, IP: [184.108.40.206]
L2: Divorce and the 72tGood morning Mick:
There are only two (2) acceptable reasons to change a SEPP distribution and neither are pleasant … death and disability. No, divorce is not an acceptable reason to split a SEPP Plan universe without incurring the penalties.On the bright side … I say that with some reluctance … since you just started the 72(t) distributions, the penalties for busting this early probably won”t be too great. If you started during this year (2008), then you”ll just have the 10% penalty on top of your ordinary tax liability but won”t have any interest penalty. On the other hand, if you had been taking distributions over several years, then you would want to do everything in your power to get your attorney to convince the other side to work out some other equitable settlement so you could avoid “busting” the plan and getting hit with the extra costs. Maybe receiving a percentage of the distribution amount as you receive them will be an option.Good luck.Jim2008-06-10 08:55, By: Jim, IP: [220.127.116.11]
L2: Divorce and the 72tHello Mick:
About a year ago, I was asked to opine on the interaction between a SEPP plan and a divorce ordering the division of the IRA. See the Articles section for my response as this is a fairly complicated issue.
[email protected] 15:38, By: TheBadger, IP: [18.104.22.168]