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SEP-IRA in Oregon Divorce Mediation

What is a Simplified Employee Pension IRA (SEP-IRA)?

A Simplified Employee Pension Individual Retirement Account (SEP IRA, or SEP) is a pre-tax retirement account at a small business or for a self-employed person. A SEP shares almost all of the same characteristics as a traditional IRA. The three most common ways that Matthew's clients handle a SEP-IRA in mediation are:

Direct transfer from one person's SEP-IRA to the other spouse's IRA or SEP-IRA.
The account holder keeps the entire SEP-IRA, and the other spouse receives a different asset of similar value.
The account is fully or partially liquidated, and the cash is used in the property settlement

Matthew will help you consider your choices holistically. Ultimately, you will be deciding what weight to give the simplicity of the outcome versus the tax consequences or tax uncertainty.

Discovery: What SEP-IRA documents do you need for divorce mediation?

Most recent account statement
Transfer forms from the trustee or plan administrator

How do the discovery documents help the process?

With the statement, Matthew will determine the current balance, verify the current ownership status, confirm that the type of account is accurate, and perform several other checks.
The transfer forms are provided so that Matthew can place in the MSA all of the information that the forms will rely on to be found in the judgment.
The trustee will use the divorce judgment signed by the judge as the basis of the authority to divide or transfer the account as what is known as a "transfer incident to divorce."

How Matthew Can Help You with Your SEP-IRA in Mediation

As you consider the above options and any others that you may want to entertain, Matthew will offer feedback such as:

How best to preserve the tax advantages of a SEP-IRA if you are transferring all or part of it
How to ensure that your prerferred option is enforceable based on how it is drafted and executed
The need for careful drafting based on the requirements of the Plan
How to determine which portion of the account is a marital asset and how much is separate property of one spouse, if it was opened before the marriage
The option that it is simplest to execute
Whether the Plan has any restrictions on transfer that may preclude the desired outcome
The taxation and/or penalties that will be owed if all or part of the account is liquidated (cashed out) instead of transferred trustee-to-trustee or rolled over to another IRA
Any paperwork, processes, or additional fees necessary to complete the divorce or post-divorce that will be needed for your preferred option
The timeframe to execute each option under consideration
Whether the Net Distributable Value (NDV) differs based on which disposition you have in mind

Next Steps

Schedule a 90-minute in-person or Zoom introduction (first hour is always FREE)
or a 30-minute free "meet-and-greet" as soon as you're ready to begin mediation.