Due to the increasing trend of older people getting a divorce, or “gray divorces” as they are popularly called, older California residents are becoming increasingly concerned that divorce can impact their retirement accounts. Some fear that an ex-spouse might have hidden or moved assets at some point during or before the divorce. Fortunately, there is a way to find out if your retirement assets have been altered by a former spouse.
According to Forbes, in the event you believe you are not receiving enough from your savings over the years with your former spouse in a divorce settlement, checking out the paper trail can reveal possible discrepancies. Many retirement account distributions, such as IRAs, are disclosed on a 1099-R form. If an ex-spouse withdraws money from an IRA to reduce or even wipe out the account balance, the bank or financial institution that maintains the account would send a 1099-R to the party that withdrawed the money and the IRS.
Since a 1099-R is filed with the IRS, it does not matter if the former spouse shredded or otherwise destroyed a personal copy of the 1099-R. Amounts withdrawn from a pension or an IRA will be reported as income on the federal tax return for that year. If an individual receives money from an annuity, IRA or pension, it will be disclosed on lines 15a and possibly line 16a on any standard 1040 return.
Some Californians may not know this information exists as they sign their tax return. However, examining a tax return for the year in which the divorce started or ended, or even during a time when the spouses were seriously contemplating divorce, could uncover pension or IRA withdrawals aimed at reducing the amount the other spouse is meant to receive from a divorce agreement.
This information is only intended to educate on the issue of retirement account dispersal resulting from divorce and should not be interpreted as legal advice.