transfer IRA due to divorce
we have a client who is in the process of divorce. Once we receive the divorce decree from the attorney indicating the split of assets how do we handle the IRA. Spouse indicated that he will need to transfer the IRA to his soon to be ex Are we required to open up an account for the ex to transfer the funds into it or will that be done at her bank. Also do we code as a transfer. Thanks.
Permalink Submitted by Alan - IRA critic on Wed, 2016-10-19 17:27
The ex would set up an IRA account to receive the transfer. Copies of the court order in the settlement should be provided to your custodian and probably to her custodian if she wants a different one. The transfer is non reportable by both custodians, so there will be no 1099R or 5498. If she wants a new custodian, they can probably initiate the transfer from the bank. Of course if there are any proprietary investments in the IRA, the new custodian must be willing to accept them or there will have to be a discussion regarding which investments to transfer to get to the split specified by the decree. Any basis in the IRA will be apportioned pro rata and a new 86060 would have to be filed by each party. For a Roth IRA, the basis will also be split and info on that should be provided to the ex.