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Message
re: IRA early withdraw to fund another. (Update)
Posted on 10/7/12 at 1:39 pm to ZereauxSum
Posted on 10/7/12 at 1:39 pm to ZereauxSum
quote:
So I guess by his reasoning, married couples should never join finances in any way.
quote:
Me too. I actually assumed that there was something we were all overlooking.
Oh well, at least your client learned something new
I'm definitely not defending word for word what the advisor told his client, however, after years and years of seeing rock solid couples (you've seen them...you would NEVER suspect in a million years that certain couples would part ways) split and have awful battles with community property issues, I could definitely see where keeping retirement accounts separate would be beneficial, not just for such things as divorce but also for the death of one the spouses especially where children not belonging to both spouses are involved.
By co-mingling retirement accounts, then having to later separate those funds could result in unnecessary income taxes just to settle up community property or estate issues.
By not explaining to his client the reasoning, I could definitely see where some might consider the advisor's thoughts "silly".
2
Posted on 10/7/12 at 1:56 pm to frb1951
"John, this is my standard advice to all of my clients re: retirement accounts for you and your spouse, and it has nothing to do with your individual marriage. I advise all my clients to keep separate retirement accounts from their spouse while they are in the workforce. It is easy to combine them down the road when you both are retired, but it is incredibly difficult to split them up if they are combined and, God forbid, something goes wrong in the marriage."
Boom. Problem solved.
Boom. Problem solved.
Posted on 10/7/12 at 4:39 pm to frb1951
quote:
after years and years of seeing rock solid couples (you've seen them...you would NEVER suspect in a million years that certain couples would part ways) split and have awful battles with community property issues
Totally agree, but this kind of stuff always happens. Its a risk just like all the other risks that he is supposed to be helping his client manage. A financial advisor can't base all if his advice on just this one risk.
Like slim thug pointed out, he could have just added a disclaimer, or if he thought it was a high risk, suggested the couple draw up a contract or something. But to tell him outright that its a bad idea just because the two might divorce is bad advice IMHO.
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