Divorce and IRA ownership

Submitted by Deborah A Hall on Tue, 2017-08-01 00:08

Couple divorces in 2012. Divorce is NOT amicable. As part of settlement, husband receives part of wife’s Roth IRA and TIRA. Brokerage firm sends husband legal paperwork to receive IRAs into his name as IRA accounts. Husband never completes or returns paperwork to brokerage firm. There is no communication between the two people and his where abouts are unknown.

Wife will soon be 701/2 and will be required to take RMD from TIRA. What does she do to avoid problems with the IRS since the IRA remains in her name and ex-husband has not retitled it?



Submitted by Ben Meyer on Tue, 2017-08-01 13:16

Husband has violated the terms of the settlement by failing to cooperate, which is now causing this problem.  She should consider filing a motion with the divorce court to extiinguish his rights to his share.  But the court may come up with some other course of action, such as placing his share into some sort of escrow account.

Submitted by Alan - IRA critic on Tue, 2017-08-01 15:28

Since resolution could take considerable time, if she does not need funds in excess of 50% of the full RMD, she should just distribute her share of the RMD. In the end, if she retains the entire IRA account, she will have to make up the other half of the RMDs that are late, but she has an excellent “reasonable cause” explanation to go with Form 5329 and any penalty would almost certainly be waived by the IRS. Meanwhile, she should be sure her beneficiary is updated.

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