ROTH IRA in a Divorce settlement
I have a client who was awarded a portion of her Spouse’s ROTH IRA in a divorce settlement. Is the contribution basis calculated on what her spouse originally contributed or the amount that she was awarded?
Would the Client’s 5 year period start with the EX-husband’s contributions, or the date the ROTH IRA was transferred to the client?
The Roth tax Regs are not specific, but to be consistent with various other provisions for IRAs and inherited Roth IRAs, it should be safe to use the year when the ex first contributed to a Roth as the first year for the client as well, since the client is receiving a ratable portion of ex’s Roth. If the client can get a copy of a 5498 or other documentation of that year, they should do so. However, the client’s Roth will not be qualified until the client reaches 59.5, not when the ex reaches 59.5.
Permalink Submitted by Alan - IRA critic on Wed, 2023-09-13 22:30
It would be the % of ex’s contribution basis (regular and conversion) equal to the % of the account she was awarded. Hopefully, ex tracked that contribution basis.