Also referred to as a written separation agreement -Court issued document addressing the dissolution of a marriage or legal separation. The divorce decree will typically address how the assets in an IRA should be divided between the spouses ( or former spouses).
The transfer of an individual’s interest in an IRA to his spouse or former spouse under a divorce decree is not to be considered a taxable transfer .
The amount transferred to the spouse or former spouse is treated as the IRA of the receiving spouse
IRC § 408(d)(6) , IRC § 71(b)(2)
Additional Helpful Information
- A common mistake is to have a QDRO issued for an IRA. However, QDROs do not apply to IRAs . IRC §414(p)(9)
- The IRA custodian should obtain a copy of the divorce decree as reference for determining how the IRA assets should split amount the spouses ( or former spouses).
- The divorce decree