In a Florida Divorce, Can an IRA or Investment Be Considered in Determining Alimony?

Written by: Lenorae Atter, Attorney at Law

1097376_bens_eyes.jpgIn a Florida divorce, alimony may be awarded to one of the parties based on the circumstances surrounding the marriage. As a Jacksonville divorce lawyer, I typically tell clients that alimony is based on the need of the party and the ability of the party to pay alimony. As an example, if the Wife makes $30,000 per year and the Husband makes $100,000 per year and their expenses are not so vast as to create a vacuum in which the Husband cannot pay alimony, then most likely the Wife will be awarded alimony depending on her own monthly needs, expenses, debts and the like.
However, in determining alimony, the court must look to the available money of the parties. This means not just money available through employment, but any money that is accessible to either party, including possible monthly payouts from retirement accounts, investments or annuities, like an IRA. Therefore, in assessing whether alimony should be awarded and how much should be awarded, the courts can impute income that could be received from annuities and IRAs, even if the spouse is not yet 59 ½ for purposes of IRA withdrawals. Niederman v. Neiderman, 36 FLW D927 (Fla. 4th DCA May 4, 2011). And obviously, this would apply to wives over 59 1/2.

In the above-referenced case, the Wife was 53 at the time of the divorce and made $35,000 per year and the Husband made $500,000 per year. Once their assets were divided, the Wife received $2.7 million in IRAs and annuities. Though a typical withdrawal from an IRA before reaching 59 ½ triggers a 10% penalty, IRS regulation 72(t) can establish an equal periodic payment plan from the IRA before reaching 59 ½. This provision actually eliminates the early withdrawal penalty, if the payments are to be paid out for more than five (5) years and are based on the person’s life expectancy and reasonable rate of return. In this case, it was shown that the Wife could have such a plan that would pay out $14,500 per month. The court reduced the rate of return to make certain that the Wife’s withdrawal would not damage her rate of return and imputed $9,000 per month of income to her in determining alimony. Id.

The appellate court agreed on the imputation of income and established that the court can impute so long as there is no penalty or invasion of principal. The court also noted that in determining alimony, the court must consider all income available to the parties regardless of their interest in tapping that resource for funds. In
In reaching this decision, the court noted that all income available to the parties must be considered. The court also established that “Available” means “obtainable” or “accessible” whether the party wants to tap into or not.

While the above case dealt with an imputation of income by available funds to the Wife, the court also made it clear that this argument goes both ways. Therefore, if the Husband had available resources for monthly income, then those too would need to be imputed to him in determining the award of Wife’s alimony.

If you have a case involving alimony, then you should speak with a family law attorney in your area to better understand your rights and options.