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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

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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