I’ve been playing hooky, and my colleague Andrea Dunbar has stepped up to complete her series on points to consider in gray divorces.
DIVIDING RETIREMENT ACCOUNTS
There are important differences associated with dividing retirement plans that are already in pay status and those that are not. Some people divorcing later in life are already retired, and thus are most likely already collecting from a retirement plan. This limits the options available for dividing some plans in divorce. Different plans have different options, so it is imperative to know the rules of the plan you are dealing with.
Pension plans, as opposed to 401(k) plans or 403(b) plans, once in pay status, pay a fixed sum of money each month for the rest of a participant’s life. The amount of the payment is typically based on the income the person earned over a period of time. The payment amount will also depend on whether there was a survivor beneficiary named at the time of retirement and the extent of the continued benefit.… Keep reading
Happy New Year! Tax season for 2009 has now begun. Here are 5 simple tax tips about divorce:
1. Child support is not taxable to the recipient, or to put it more bluntly, she who pays her ex child support also pays the taxes on it.
2. Alimony is taxable to the recipient, so he who pays childsupport as alimonyor as unallocated support, is saving the taxes; or alternatively, transferring responsibility for them to his ex.
3. Unless you are in a single-sex marriage, all property transfers between you and your ex as part of your divorceare tax free. I wrote about this previously here.
4. If you and your soon-to-be-ex are dividing pensions on divorce (again only if you were not in a single-sex marriage), then there is a way to transfer pensions without any tax consequences. It is called a qualified domestic relations order orQDRO, and there is a whole niche of the bar who do nothing else.
5. Finally, the IRS has five tips for recently married or divorced taxpayers… Keep reading