60 day rollover from QDRO

Submitted by wes carr on Fri, 2015-12-11 15:30

Can a divorced spouse do a 60 day rollover when the money is being distributed from the former spouses IRA pursuant to a signed court order (QDRO or DRO) or is a direct transfer the only option?



Submitted by David Mertz on Fri, 2015-12-11 21:31

  • A transfer of an IRA incident to divorce must be trustee-to-trustee, which is not reportable to the IRS.
  • Once transferred to the receiving spouse’s IRA, the funds are treated as if they have always been in the receiving spouse’s IRA.
  • A *distribution* from the former spouse’s IRA can only be rolled over by the former spouse to retirement account belonging to the former spouse.  If a distribution has already been made less than 60 days ago of an amount that should have been transferred trustee-to-trustee, the former spouse can roll it over within 60 days, provided this is not in violation of the one-rollover-per-12-months rule, then request that the transfer be properly made trustee-to-trustee.
  • If a distribution was made more than 60 days ago of an amount that should have been transferred trustee-to-trustee, well, without a favorable ruling on a PLR alleging financial-institution error it seems that the former spouse is stuck with the distribution and still needs to request a trustee-to-trustee transfer of IRA assests to satisfy the divorce agreement.

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