Splitting 72(t) in divorce

Submitted by Josh Harmon on Wed, 2023-07-19 00:30

Have a client going through a divorce. Looking to split a 72(t) IRA. Is this possible without busting the 72(t)?



Submitted by David Mertz on Wed, 2023-07-19 02:01

The IRS has in the past issued several favorable PLRs for this situation including PLRs 201434030, 201030038 and 200717026.  However, a PLR applies only to the individual to whom it is issued and are not permitted to be used as precedent, so to be sure that the IRS would not treat this transfer as busting the plan the client would have to get their own PLR with a favorable ruling, which would likely be expensive.



Submitted by Alan - IRA critic on Wed, 2023-07-19 02:06

  • The following is copied from Bill Stecker’s recent article on divorce and SEPPS. Recognize however that PLRs are not always consistent.
  • “If a taxpayer and his or her spouse divorce, the SEPPs, by default, stay with the taxpayer who was originally receiving them. But, what if the assets within the SEPP universe are split (let’s say 50% and 50%) pursuant to a QDRO?100 The IRS has ruled on numerous occasions that there are several solutions available as follows: For the original IRA owner & recipient of the SEPP withdrawals; he or she may: Continue the existing SEPP distributions as if nothing has happened. Continue the existing SEPP distributions on a proportionate or ratably reduced basis. For example, assume that the original SEPP program called for a $60,000 per annum distribution & the taxpayer has just transferred 50% of the IRA to his or her ex-spouse. Our taxpayer can continue post-divorce SEPPs at $30,000 per year. For the new IRA owner who has received what is essentially a new IRA from his or her exspouse; he or she may: Do nothing at all. Commence a new SEPP program completely independent and unrelated to the SEPP program that was in progress with the ex-spouse. Voluntarily pick-up the remainderman $30,000 of SEPP distributions per year. In this last case, the history of the prior-year SEPPs would accrue to the new IRA owner; e.g. suppose that $60,000 per year had already been running for three years; then, the new IRA owner would “so to speak” receive three years of credit towards satisfying the five year rule. However, the new IRA owner’s age (independent of the ex-spouse’s age) would now govern in applying the 59 ½ test.”


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