RMD on IRA Funds from Divorce

Submitted by Marina Ferrone on Mon, 2017-10-16 20:03

Taxpayer is 71 and received her RMD this year. Ex-husband is 69 . She will be receiving 401(k) IRA monies as a result of the divorce settlement. Is taxpayer required to take RMD from settlement money?



Submitted by Alan - IRA critic on Tue, 2017-10-17 02:07

  • No. While the alternate payee taxpayer under a QDRO is subject to RMDs on the separate account balance still in the plan, the age of the employee determines when such RMDs begin and what the divisor is. Since the employee is not yet subject to RMDs, the taxpayer is also not yet subject to RMDs from the 401k plan. However, once the taxpayer does a direct rollover to her own IRA, she will subject to the IRA RMD rules of an owner. If the rollover is done this year, her first IRA RMD will be for 2018.
  • On the other hand, if the taxpayer will also acquire a portion of ex’s IRA as a transfer incidental to divorce, the first year for RMDs on that money will be 2018, with the calculation based on the 12/31/2017 balance.

Submitted by Marina Ferrone on Tue, 2017-10-17 17:30

Thank you!

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