Inhereted IRA transfer to spouse as part of divorce settleme
Can an Inhereted IRA be transferred to a spouse as part of a divorce settlement without causing tax to the transferor spouse? Is there a procceedure to accomplish this?
Can an Inhereted IRA be transferred to a spouse as part of a divorce settlement without causing tax to the transferor spouse? Is there a procceedure to accomplish this?
Permalink Submitted by Jose Morales on Wed, 2010-09-08 17:13
I want to be very clear that I am absolutely not a lawyer, and am only expressing my opinion, but it seems incredible to me that an inherited IRA would be in danger of having to be split with a spouse in a divorce settlement. I’d be upset at any attorney that would not argue that the IRA, while still in a beneficiary IRA, is still the property of the deceased until such time as the beneficiary takes a distribution. Again, I am not a lawyer so maybe I have this completely wrong and inherited IRAs have already been established as being the same as any other property held by an individual.
Permalink Submitted by Burt Moss on Wed, 2010-09-08 17:34
I agree with you, but the inhereted IRA is being used as a bargaining chip against alimony payments. My question is can this be done without income tax consequences to the spouse transferring the inhereted IRA.
Permalink Submitted by Jose Morales on Wed, 2010-09-08 17:44
It would only avoid tax consequences if it is part of a divorce settlement where a judge clearly states that the funds are to be trasferred to the spouse in a non-reportable fashion. You do not want a divorce decree that simply says the funds are to be given to the spouse. If the funds are being voluntarily given to the spouse, and not part of a divorce settlement, then the transaction would be reportable.