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Divorce, Retirement Accounts And Taxes: The Importance Of Getting It Right

Source: forbes.com - Nov 21, 2019

In law school, one of our professors noted the irony of divorce settlements. It’s funny, she remarked, that two people who often found it difficult to talk about money when they were married are now required to discuss it at a time when they may no longer talk to each other about anything. Even when family lawyers are involved in facilitating, it can be hard to agree on a distribution scheme—and even more challenging to carry it out. One taxpayer figured this out the hard way, drawing additional taxes from the Internal Revenue Service (IRS) for an early withdrawal from a retirement account.

Here are the facts of the case. On October 29, 2014, William Rosenberg reached a settlement agreement with his ex-wife. Under the agreement, she was required to pay him $10,000 from her retirement account as a reimbursement for his payment to her of liquidated retirement proceeds during their marriage. Simple enough, right?

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Category: General Business