Individual Retirement Account (IRA) in Oregon Divorce Mediation:
Mediator Matthew M. House, J.D.

An Individual Retirement Account (IRA) is a pre-tax retirement account not offered as a benefit of one's employment. It is similar to a 401(k) in terms of its tax treatment and how it can be handled in a divorce, but there are important differences.

Please note that this page addresses only Traditional IRAs. Roth IRAs have their own page. and the information below should not be applied to Roth IRAs.

If you have an IRA,  here is the short version of what you need to know about how the mediation process will address it:

• Transferability: The IRA funds can be transferred to an IRA in the name of the other spouse. As long as it is transferred into another IRA, there is no taxation associated with the transfer.
• Documentation Needed: Usually, the most recent 3-12 months of statements and transaction history.
• Valuation: The real value of an IRA needs to be adjusted for the effects of future taxes. All IRA funds will be taxed when they are withdrawn, even if you wait until normal retirement age to do so. If you choose to withdraw cash from your IRA before you are 59 1/2 years of age, you will pay a penalty unless an exception applies. A divorce-related transfer to another IRA is not considered a withdrawal and therefore is not a taxable event.
• Process: Transferring IRA funds to the other spouse is not difficult. Assuming the other spouse already has an IRA, it is just a matter of a form or two, which you can complete on your own. If the receiving spouse does not yet have an IRA, she or he will need to open one.
• Implementation Time: The processing time to transfer or divide an IRA can vary, but it is usually relatively brief.

Matthew may recommend a particular disposition of the IRA, based on your circumstances. However, the way you choose to handle the ownership or transfer of your  IRA is entirely up to you, assuming that both parties agree. Like all other decisions in mediation, the final decision is yours.