RMD and divorce
Hello,
I have a client that will be 70 1/2 in Dec of 2015 and will need to take his RMD. He is in the midst of getting a divorce, which will be finalized first part of 2015.
My question is, since the IRA will be split 50/50, will he still be required to take distribution based on 12/31/14 values?
Many thanks,
Mike
Permalink Submitted by Alan - IRA critic on Fri, 2014-11-14 00:04
This is a good question. The RMD is established on Jan 1 of any year and does not change due to subsequent change of marital status. Therefore client’s RMD for 2015 will not change and will still be based on 100% of the IRA value on 12/31/2014. If you meant that client will actually reach 70.5 in 2015, he can still take all or part of his first RMD as late as 4/1/2016 and must still take his full 2016 RMD by 12/31/2016. His ex spouse will not have an RMD due until 2016 based on the value of her portion of the IRA on 12/31/2015, but only if she will have reached 70.5 by 12/31/2016. The IRA should be partitioned by non reportable direct transfer (no distribution) at the appropriate time aft er providing copies of the agreement to the IRA custodian. Hopefully, the divorce agreement is specific regarding the valuation date for the 50% split and whether it will be before or after he takes his 2015 RMD. Now, does he have basis in his IRA?
Permalink Submitted by Mike LaRose on Fri, 2014-11-14 17:40
No basis. All pre-tax money. the Spouse is 2 years younger. Great insight.thank you very much. Mike