(Closed) Fiance has a very large Roth retirement account, wants to split it 50/50 with me

posted 3 years ago in Money
Post # 2
Hostess
9127 posts
Buzzing Beekeeper
  • Wedding: Dorset, UK

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raspberrybidet :  It sounds like sitting down with some kind of financial advisor would be a good plan for you both.

Post # 3
Member
2679 posts
Sugar bee
  • Wedding: September 2014

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raspberrybidet : I believe these laws vary depending upon what state you are in. You’re safest bet is to consult an attorney in your state. If you don’t want to do that, you should at least research the specific laws in your state. Feedback from people on here may be misleading if they live in NY and you live in TX. 

Post # 5
Member
2107 posts
Buzzing bee

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raspberrybidet :  I remember your previous thread about your Fiance and you purchasing a home together. It honestly sounds like you need to meet with a 3rd party financial planner, it seems like your Fiance is trying to make up to you the downpayment on the house and is going to dip into the Roth account to do that? I’m not sure that is a great idea, and I think you’d both benefit from getting a better grip on the “you vs mine” money dynamic in your relationship.

Post # 6
Member
126 posts
Blushing bee

If you live in a community property state, your statement is correct. The default rule is that only the funds acquired during the marriage are split 50/50. This can be altered with an agreement (prenup). If you don’t live in a CP state, a judge would divide the funds in a manner they consider to be fair taking into account how much you guys make, future earning potential, separate property, etc. Make sure you’re clear on what he means by half. Half of what is currently in the account today? Half at the time of divorce? As pp suggested, I suggest contacting an attorney in your area, they would be better equipped to assist you with this issue than a financial advisor. A financial advisor cannot give you legal advice and what you are asking about in this case is more legal than it is financial.

Post # 9
Member
924 posts
Busy bee

OP I do not know the answer to your question, but you are wrong on Roth IRAs and they do not receive a tax break. They are contributed after tax.

Post # 10
Member
126 posts
Blushing bee

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bluepanda :  partially correct. Yes, you contribute after tax, but earnings and withdrawals are tax free.

Post # 11
Member
71 posts
Worker bee

You absolutely need a prenup. His Roth IRA is separate property and regardless of whether you live in a community property state or a marital property state, the funds up to your wedding date are 100% his. The state would only give you 50% or equitable amount of the money accrued during your marriage if you don’t have a prenup specifying otherwise. As in: he now has 50000, at divorce time he has 150000, state would give you 50% of 100000 or equitable amount.

 

Post # 12
Member
1412 posts
Bumble bee

Since a Roth only has money in it that has already been taxed, you can use any/all of your contributions towards a down payment. So let’s say he’s put in 10k and the total in the account, due to growth, is $15k, you can withdraw the $10k without penalty at any time. 

Post # 13
Member
15015 posts
Honey Beekeeper
  • Wedding: June 2011

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knickergold :  I believe this is only true if those funds have been in the account for at least 5 years.

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raspberrybidet :  If you have enough money for the house, but are waiting cause he can’t contribute to the down payment, but will be paying half the bills, why not make the agreement that whatever down payment you put in goes back completely to you in case of a split or anything.  That way you don’t have to wait on teh house if you dont want to just for the sake of him having something to contribute.  My husband didn’t have anything to put into the down payment as he was younger and contributed heavilty into 401k and investment accounts so I put down over 6 figures myself cause we didn’t want to wait.  We were getting married so it was “our” money and our life together anyways.  Why delay it on a technicality of who’s money is whos?  (unless of course you plan on keeping everything separate and spliting things even after getting married).

Post # 14
Member
1412 posts
Bumble bee

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pinkshoes :  Not if it’s their first home!

Plus, he’s had it for 10 years, so a chunk of it is past the 5yr rule

Post # 15
Member
15015 posts
Honey Beekeeper
  • Wedding: June 2011

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knickergold :  Ooops! I missed the 10 year part.  Really?  I didn’t realize that!  I guess that makes sense since you can borrow against 401k for a first home too.  That’s a whole bunch of lost opportunity cost though if they dont really *have* to do that. 

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