Avoiding the 10% penalty in a Divorce
😕 In a divorce, if the wife receives her husband’s IRA, can she withdraw an amount from it prior to the transfer, pay the taxes BUT AVOID the 10% penalty?
😕 In a divorce, if the wife receives her husband’s IRA, can she withdraw an amount from it prior to the transfer, pay the taxes BUT AVOID the 10% penalty?
Permalink Submitted by Alan Spross on Fri, 2008-10-17 22:15
If the IRS custodian is partitioning his IRA into two accounts, one for each of you, you cannot take a distribution until your own account is set up. Then, you would still owe tax and penalty unless you were over 59.5 or qualified for another exception, such as setting up an equal periodic payment plan (72t or SEPP).
Now, if you are asking whether your ex could distribute an amount from HIS IRA before the split and give it to you, he could do that, but then he would owe tax and penalty unless HE met an exception to penalty.
You may hear about a penalty exception for a QDRO, but that is a court ordered split of an employer plan, not an IRA. The QDRO exception does not apply to IRA accounts.