Does 5 Year Period transfer in Divorce

Submitted by Mhotchkiss on Mon, 2019-03-18 13:42

I searched and was unable to find an answer to this – In a divorce, when the Roth IRA of one is split and the other spouse receives a portion/half of the Roth IRA, would the 5 year holding period requirement for qualified distributions pass with the asset to the receiving spouse? Can you please site an official source? Thank you – m



Submitted by Alan - IRA critic on Mon, 2019-03-18 16:32

  • m-good question. Am not able to locate an IRS Reg, however, Intuit and others state that an IRA received in a divorce is treated as a division of marital property. Therefore, IRA basis in a TIRA would be split proportionately to the amount transferred. For a Roth IRA, the proportion of regular and conversion contribution basis would be transferred, and the receiving spouse would be treated as having first contributed to a Roth when the Roth owner first contributed. This is also consistent with the treatment of a spousal inherited Roth IRA. Perhaps the IRS has specifically clarified this at some point, but I am not coming up with a cite.
  • Not sure if this extends to the situation where a qualified Roth is transferred to a spouse under 59.5. In that case, even if the acquiring spouse is credited with the first year of contributions, that occurred based on the Roth contributions in the past of marital property. IRS Reg 1.402-2 QA 4 states that an inherited spousal Roth that is assumed by the surviving spouse is treated from that point on as the Roth of the surviving spouse. Therefore, for an inherited Roth the surviving spouse will have to attain 59.5 before the Roth is qualified. It is not clear whether this analogy is credible however.

Submitted by [email protected] on Mon, 2019-03-18 19:07

Thank you.

Add new comment

Log in or register to post comments