408(d)(6)
Is anyone familiar with 408(d)(6)?… It seems to provide that a transfer of an IRA interest from a living IRA owner to his spouse is not a taxable transfer to the owner. Does this mean its taxable to the spouse or not taxable to anybody? Can you give an example of where this may be used and why it was put in the code in the first pace?
Permalink Submitted by mk foss on Sun, 2009-03-29 19:36
The section is listed below. It’s used in connection with a divorce only. The recipient is taxable unless it is rolled over.
6) Transfer of account incident to divorce.
The transfer of an individual’s interest in an individual retirement account or an individual retirement annuity to his spouse or former spouse under a divorce or separation instrument described in subparagraph (A) of section 71(b)(2) is not to be considered a taxable transfer made by such individual notwithstanding any other provision of this subtitle, and such interest at the time of the transfer is to be treated as an individual retirement account of such spouse, and not of such individual. Thereafter such account or annuity for purposes of this subtitle is to be treated as maintained for the benefit of such spouse.