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February 19, 2009

Divorce decree (divorce or separation instrument)

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Definition

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

Referring Cite

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
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