IRA Transfers per Divorce Decree
I have a client who is to recieve a significant portion of her ex-husbands traditional IRA per the divorce decree. Am I correct in that we can do a direct transfer of the $$ into her own Traditional IRA? Or does it have to go into a completely seperate IRA that cannot be comingled with any other funds?
Permalink Submitted by Alan Spross on Wed, 2008-04-23 20:14
It does not have to be kept separately, however the agreement should be clear regarding who gets any basis in the ex’s IRAs. If the receiving spouse acquires some or all of the basis, it needs to be reported on Form 8606 to add to any basis she might have had in her own IRAs. The ex must also amend the basis in his IRA.
An existing IRA can also receive a name change and change of SSN pursuant to the settlement agreement, and the IRA can be left as is. It then becomes just another IRA owned by the receiving spouse. There is no reason not to combine the IRAs however.