IRA and divorce
Hi, Terry! Big fan!! I just got divorced, and in the divorce I’m getting an IRA account worth about $33,000 today. Because of the divorce (bad lawyers) and taxes, I’m in a financial hole right now and want to liquidate that IRA. I’m being told that my only option is to have it transferred from my ex’s IRA to one in my name. Then, I’m told, I could liquidate it but will be taxed as income and penalized. I’m 53 but have two kids in college, and at the moment I’m only a freelancer (newspaper journalism degree, unfortunately). Is it true I have to have it moved to another IRA or do you have a suggestion on how I can get that money with the least penalties? Thank you for your time and expertise!
Terry Says
I wish I could give you better news, but the information you described is correct. You must have it rolled into an IRA in YOUR name (part of the Qualified Domestic Relations ORder — so make sure this is done correctly!).
Then, you would face ordinary income taxes and a 10% penalty to take the money out.
DONT DO IT!! It’s not worth it, since nearly half will go in taxes. My suggestion is to contact the National Foundation for Credit Counseling at 800-388-2227. They will help you organize your life based on your new situation.
MY advice is to immediately get another job — a second or even a third job to bring in more income!! Even journalist have to sometimes work as servers in a restaurant, as childcare givers, as home aides for seniors. Be creative.
If you’re only 53, you get to start a whole new life. And if your kids have to drop out of college, it seems that’s on your “ex”!
Don’t worry what your kids will think of you, or your ex, if you are the “poor” one. One day they will look back and be proud you kept your head above water, no matter what it took. I promise.
