Therefore, property with a low tax basis is more valuable when negotiating the division of property in a divorce. There is less of a disadvantage in taking low-basis assets. It is more practical to make alimony and support payments by selling low-basis property. The 15 percent excise tax on IRA withdrawals has been repealed for withdrawals after December 31, 1996. Therefore, spouses can no longer argue that they can't make withdrawals to pay support.
IRAs are now valuable sources for support and property buy-outs.
You obtain a tax deduction when you deposit money in a regular IRA and pay income tax on what you take out. There are no tax deductions at the beginning with a Roth IRA, but withdrawals are tax-free. If you convert to a Roth IRA, you must pay income tax, but no early withdrawal penalty, on the amount you convert. For conversions in 1998, the income can be spread over four years. If you are married and file your tax returns separately, you cannot convert.