Q: Are IRA accounts considered community property?
A:
In California, which is a community property state, most assets acquired during marriage are generally considered community property and are owned equally by both spouses. However, the treatment of IRA accounts can be complex and depends on several factors:
1. Timing of contributions: IRA contributions made during the marriage using income earned during the marriage are typically considered community property.
2. Premarital IRA: If an IRA was established and funded before the marriage, it is usually considered separate property. However, any contributions made to the account during the marriage with community funds may be deemed community property.
3. Rollovers: If an IRA was funded by rolling over funds from a 401(k) or another retirement account earned during the marriage, it may be considered community property.
4. Beneficiary designations: The named beneficiary on an IRA account does not determine whether the account is community property or separate property.
In the event of a divorce, the division of IRA accounts can be negotiated between the spouses or determined by a court order. It is important to consult with a family law attorney and a financial advisor familiar with California's community property laws to understand how IRA accounts may be treated in a specific situation.
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