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May 15, 2012

Transfer of IRA to spouse under private agreement is not allowed


If you are required to share your retirement accounts with your spouse (or former) as a result of a divorce or legal separation, it should be done based on a court approved divorce decree or legal separation agreement. This allows the amount to be transferred to your spouse’s IRA on a non-taxable basis, and your spouse would be responsible for paying any income tax due on any subsequent distributions made from the amount.

If you give your IRA assets to your spouse under a private agreement, the amount given to your spouse will be treated as a distribution to you. You would then be required to include the amount as ordinary income for the year that the amount left your IRA. Further, the amount would not be eligible to be credited to your spouse (or former spouse’s) IRA.

See definition of Divorce Decree

Tip by Appleby Retirement Consulting Inc

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 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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