It is necessary to itemize which assets are pre-tax and which assets
are post-tax. An IRA or 401(k) is generally considered
pre-tax money. When the parties consider the
value of this asset they need to figure out a method of computing
a post-tax value if they are going to be able to ascertain if it is
an equitable distribution. For example, if a party has $40,000 in
an IRA and the other party has $40,000 in the bank this may not be
an equal division for one party to keep the IRA and the other party
to keep the bank account. If a person keeping the IRA were to liquidate
the account today, it may be subject to a penalty plus may be subject
to ordinary tax on the money. The person who has the money in the
bank account may incur no penalty and no tax. Therefore, depending
on the tax bracket of the person holding the IRA, it is conceivable
that the present value is approximately $26,000 not $40,000. Schoonover,
Rosenthal Thurman & Daray
is able to assist our client s in sorting through
the different types of assets, their value and
their tax implications.