Ryan Kalamaya explains what specifically happens to IRA accounts in a divorce.
What is Divorce at Altitude?
Ryan Kalamaya and Amy Goscha provide tips and recommendations on issues related to divorce, separation, and co-parenting in Colorado. Ryan and Amy are the founding partners of an innovative and ambitious law firm, Kalamaya | Goscha, that pushes the boundaries to discover new frontiers in family law, personal injuries, and criminal defense in Colorado.
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Ryan Kalamaya (1s):
Welcome to Divorce at Altitude, a podcast on Colorado family law. I'm Ryan Kalamaya each week, along with my business partner and cohost Amy Gosha or an expert, we discuss a particular topic related divorce or co parenting in Colorado. In addition, we have created a short series of lessons that will take you through the legal process of divorce and answer your questions from simple to complex divorce. Isn't easy. The end of a marriage, especially when children are involved, brings a great deal of loss and change. We hope these practical tips and insights will help you on your journey to a new and better life.
Ryan Kalamaya (42s):
This episode is about individual retirement accounts, IRAs, and how they are addressed in a Colorado divorce. Now here's the good news is that generally speaking IRAs are much easier to deal with then compared to a 401k or a pension. And that is because the 401k and a pension, those are what are called qualified plans, and it requires a khodro a qualified domestic relationship. Now you don't need that for an IRA. They still can be tricky. However, and let's talk about some of the differences between the IRS. There are different kinds of IRAs. There's a traditional IRA, simple IRA, SEP IRA. Those are generally taxable.
Ryan Kalamaya (1m 23s):
So what that means is that when distributions or withdrawals are made, that the income or the amount of money that's withdrawn is taxed, and that is in contrast to a Roth IRA. So the Roth IRA is, can be treated a little bit differently when dividing property now dividing IRAs is not a taxable event. So if you withdraw money, that is a taxable event, generally speaking, but when you're transferring it pursuant to a divorce that is not triggering some sort of tax bill, if you do it right, the other thing to keep in mind is about how you actually transfer it. Some plans or some companies such as Schwab or Vanguard, they might require the other spouse, the spouse that is receiving the property, the IRA to open up an account, but they can also do.
Ryan Kalamaya (2m 14s):
What's called a rollover. Oftentimes with IRAs, we'll look to try to make it as easy as possible and use one account or two accounts if at all possible. So if we use our Eric and Melanie Wolfe story, for example, and Eric has four different IRAs because he had different jobs or started new accounts, we'll generally try to find one account that would allow them to equalize between Eric and Melanie Wolfe and target that. Now other couple of things to keep in mind is that market is going to go up and down. If the IRA is invested in some sort of equities and frequently, what we see are mistakes are made when you're dealing with, are you going to divide an account by a percentage amount?
Ryan Kalamaya (2m 55s):
So 50, 50, or are you going to deal with a particular amount? Those are just Things to keep in mind when dividing, IRAs and Divorce. Thanks for listening or watching this short lesson on the Divorce at Altitude podcast. If you found this helpful, please leave a review or share with a friend. It does help for others that are going through or thinking about divorce in Colorado. If you want to find out more information, please visit Kalamaya law or Divorce at Altitude dot com. That's K a L a M a Y a.law. Remember, this is educational information. It's not intended to be legal advice. Please consult with an attorney about the particulars of your case.
Ryan Kalamaya (3m 37s):
We're happy to answer questions. Feel free to give us a call at (970) 315-2365.