IRA/Support?

[BeloTenia]

What is the name of your state? NY

My husband and I are going to use a mediator for our divorce. We have been 'seperated' in the same house for a couple years. We are working hard on remaining friends, and have already seperated all of our physical items without issue.

We are now working on our financial assets. I have a question about IRA accounts.
MY husband says, he was told that my share of the IRA could be withdrawn without the usual 10% penalty, because of divorce.
I am wondering though if it can be taken out a little at a time, so I won't be put in such a high tax bracke, if a certain amount is determined in the paperwork? Or is it a one time withdrawl that is allowed..?

Also, I was going to settle on a lump sum monetary settlement, so that he wouldn't have to worry about monthly support. But now I wonder if that is a good idea. Not only am I settling for less this way, but I've not worked in yrs. and need to show an income of some kind 'til I get on my feet. I'm afraid getting a loan for a house for me and my son would be impossible without it. What would you suggest?

Thank you for your time...

 

[LdiJ]

What is the name of your state? NY

My husband and I are going to use a mediator for our divorce. We have been 'seperated' in the same house for a couple years. We are working hard on remaining friends, and have already seperated all of our physical items without issue.

We are now working on our financial assets. I have a question about IRA accounts.
MY husband says, he was told that my share of the IRA could be withdrawn without the usual 10% penalty, because of divorce.
I am wondering though if it can be taken out a little at a time, so I won't be put in such a high tax bracke, if a certain amount is determined in the paperwork? Or is it a one time withdrawl that is allowed..?

Also, I was going to settle on a lump sum monetary settlement, so that he wouldn't have to worry about monthly support. But now I wonder if that is a good idea. Not only am I settling for less this way, but I've not worked in yrs. and need to show an income of some kind 'til I get on my feet. I'm afraid getting a loan for a house for me and my son would be impossible without it. What would you suggest?

Thank you for your time...

Are you talking about a lump sum settlement for alimony? Or a lump sum settlement for child support? Its possible that you wouldn't be permitted to do that for child support.

First, as far as your property settlement is concerned, the marital assets should be divided in half. However, that doesn't mean that each individual asset needs to be divided in half.

For example, you could take less of another asset or assets, in order to leave your IRA intact. However, if you do need to divide your IRA, it can be done without any tax consequences at all. (or at least none to you) If its divided via a QDRO (Qualified Domestic Relations Order) then the account can simply be split into two accounts, one for you, and one for him, without any tax consequences. Then, if he chooses to withdraw the money instead of leaving it for his retirement, then the tax consequences are his.

 

[BeloTenia]

thank you very much for the info.. You have cleared a few things up in my mind.

There is no child support involved, my son is from a previous marriage.
Basically what we have is IRA money and outstanding credit cards, a house on the market, a mortgage, a home equity, and we each have a vehicle.

He is going to put the cards in his name and pay them, the mortgage and equity off with the sale of the house, (though the market is horrible, and lord only knows when that will be). There will be some left over which will be his.

I was going to take a lump sum from the IRA. Half being mine and a bit extra as a lump sum for support/alimony.
But what you said made my light go on. The IRA is half mine...I should take half, keep it in IRA so as to avoid taxes. It would still be an asset. Money in the bank if you will. And have him pay alimony monthly. I could avoid a higher tax bracket and have a monthly income..??

Originally he had agreed to pay alimony for 4yrs. We have been married/in same household for six, but together for about 10yrs.

 

[nextwife]

YOU are also entitled to half the debt. If he is taking all the debt, he is already taking an unequal share of the costs. What are you "getting " per month by his taking all the debt? THat alone, if there is a fair amount of debt, is like paying alimony as that it puts more money in your pocket every month, than if you took your half of the debt.

 

[BeloTenia]

The sale of the house will pay for all the debt. He will keep the diff. and the IRA will be split accordingly, so it comes out even.

Believe me, if I didn't need to, I wouldn't ask for alimony either. I've never believed in alimony. Each adult should be able to take care of themselves.
I haven't worked since my boy was 2. My husband wanted me home and there was alot of anguish trying to make our family bigger. I have been the good wife, and it is time to get back to reality.
But none the less, I am searching for a position in a nearly empty trough. I would love nothing more than to support myself and my son, on my own.