Many Pennsylvania couples who decide to divorce have a lot to consider: who gets the house? Where will the kids be staying? What some of these couples fail to adequately address is, what happens to the retirement savings?
There are many facets of retirement to consider, and they are not necessarily cut and dry. For example, Investment News reports that there are many complicated Social Security benefit regulations relating to divorce. While it may seem like a simple statement to say that a couple must be married 10 years before a divorce for either ex-spouse to be able to make a claim on the other’s Social Security work record, this is more nuanced than it seems. Couples divorce and then remarry one another often enough that there are specific rules determining whether or not the remarriage can be added to the first marriage to add up to ten. If the remarriage begins in the calendar year immediately following the divorce, the years can be combined. Also, a couple who began benefits and then divorces cannot rescind those benefits from their ex-spouse. In fact, ex-spouse can suspend their benefits and it does not prevent his or her ex-spouse from collecting benefits on the otherwise suspended work record.
A recent ruling from the U.S. Tax Court is also serving as a reminder of the regulations of splitting IRAs and the benefits of working with a professional in a divorce. According to Financial Planning, a couple who was trying to divorce amicably decided to split their IRA down the middle, but doing so before the divorce was finalized caused the ex-husband to owe the IRS a tax penalty of 10 percent of the entire IRA.
For more information, contact Louis Wm. Martini, attorney at law.