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IRA Rollover Trap (in Divorce Cases)

In divorce cases, it is normal to split IRA accounts between spouses.  Normally, this is done by one spouse rolling over a portion, oftentimes half, of his/her IRA account into another qualified IRA account in the name of the other spouse.  This is a non-taxable event.  However, a recent tax court case and a change in the procedures by the Internal Revenue Service have set limitations on the number of IRA rollovers permitted.  

If more than one IRA is rolled over in a 12-month time period, that could create a taxable event.  In other words, if a spouse rolls over an account in August of 2014, and then in July of 2015 pursuant to a divorce rolls over another IRA account, the second rollover could be treated as a taxable event subjecting that spouse to ordinary income taxes.  The lesson is to be careful in doing IRA rollovers and time the rollovers to occur at least one year apart.  

© 2019 Odin, Feldman & Pittleman, P.C.

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Leslye Fenton, family law, real estate, attorney, Odin Feldman, law firm
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As a seasoned lawyer and mediator, Leslye Fenton knows how to effectively communicate, negotiate, and resolve conflict. Her training in mediation combined with her legal skills enables her to help clients identify their goals and develop strategies to obtain their desired results. She believes in listening carefully to her clients to identify their key interests. She then provides them with a comprehensive understanding of the legal issues confronting them, and helps them determine how these interests can be protected and promoted. Leslye’s mediation training gives her a unique perspective...

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David M. Zangrilli, Jr., Odin Feldman Law Firm, Family Law Attorney
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A  family law attorney for over 10 years, David Zangrilli strives to meet each individual client’s specific needs in the most efficient, thorough, and cost-effective manner possible by providing sound advice, reasonable expectations, and zealous advocacy. David’s approach to his Family and Domestic law practice involves thoroughly educating his clients on the legal process, likely outcomes in court, and reasonable settlement options.  

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J. Patrick McConnell, Odin Feldman Law Firm, Family Law Attorney
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With more than 30 years of experience in Family & Domestic Relations law, Patrick McConnell represents clients who have particularly complicated matters that cross state or international boundaries, or that involve complex financial issues. His background in finance and knowledge of tax law provide insight that can lead to innovative solutions. When necessary, Patrick teams with an attorney from the firm’s Estate Planning or Corporate practice areas to assist with the preservation of wealth for his clients' children or their future generations.

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Kristina  A. Cruz, Family Law Attorney, Odin Feldman Law Firm
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Kristina Cruz believes the best approach to assist her clients is to blend her legal knowledge with each individual client's unique personal objectives to ensure that every relationship is built upon a foundation of mutual trust and client input into the legal process. A background in journalism combined with powerful listening skills enable Kristina to understand the full extent of a family or domestic relation situation and communicate those matters succinctly and effectively in the courtroom. Clearly comprehending all aspects of each individual case gives Kristina the ability to...

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