Retro-Bob wrote:
- quote -

See my answer of Jan.3 to the original post. Never, never,
never take a distribution from your own IRA to give to the
spouse as part of a divorce agreement. Transfer the IRA
funds trustee to trustee.

--
Alan
http://taxtopics.net

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Retro Bob <uctraing[at]ultranet.com> writes:

- quote -

No, assuming that none of the exceptions applies. (Divorce
isn't one of them.)

Phil Marti
Clarksburg, MD

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Herb Smith" <smithff33[at]aol.com> wrote:

- quote -

Herb:

I must be misunderstanding your post as it seems to run
counter to the other replies - unless this is a bit of an
exception as you'e outlined it.

Are you saying this(?): There's a QDRO (or settlement) that
requires money to be pulled from the donor's account and
provided to the spouse. Donor hands over check, but spouse
fails to put it into an IRA account. Wouldn't the spouse be
subject to the 10% early withdrawal for failure to roll it
over i.e. it's an early distribution for the spouse ? Are
you suggesting that if the spouse never deposits it that the
rules change ?

Bob

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"Retro Bob" <uctraing[at]ultranet.com> wrote:

- quote -

1) Technically, QDRO's are only issued for qualified plans,
not IRAs. A court order accomplishes the same thing, but
it is not a QDRO.
2) If you take the money out of the IRA, separated or not
separated, it's taxable and subject to possible penalty.
No exceptions.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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"Retro Bob" <uctraing[at]ultranet.com> wrote

- quote -

Correct.

- quote -

Nothing gained.

- quote -

The normal IRA rules apply, so you'd have to meet one of the
exceptions in the Code and Regs.

--
Paul A. Thomas, CPA
Athens, Georgia

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The way I understood it, a QDRO is necessary for other
pension plan forms, but not for IRAs. Custodians may insist
on a QDRO anyway, though.

You can transfer assets from the IRA of one of the divorcing
spouses to the IRA of the other without tax consequences, so
long as the transfer is specifically called for by the
settlement agreement, whether or not the settlement
agreement meets the conditions of a QDRO. The recipient
spouse is then subject to the usual taxation on
distributions from his or her IRA.

So no, there isn't a way to get money out of an IRA, if the
distribution would otherwise be penalized, through a divorce
settlement without incurring the penalty. The best you can
do is get it into another IRA. (Possibly the worst you can
do is to transfer without a settlement agreement: then it's
a premature distribution from the donor's IRA, and the donor
gets hit with tax and penalty, even on an attempted rollover
to the recipient's IRA.)

--
Chris Green

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Retro Bob wrote:

- quote -

Age. (59.5 years)

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Retro Bob <uctraing[at]ultranet.com> wrote:

- quote -

Moneys transferred via a QDRO escape the 10% excise tax for
early distribution.

That's going to be true here, if the court orders a property
settlement from one spouse's IRA to another, even though it
is a different form of court order. A QDRO would not be the
hammer needed to seize funds from an IRA -- only from a
qualified employer plan, such a a 401k or 403b, which has
more protection against being seized than an IRA. Best to
have IRA custodian transfer the amount to spouse's IRA
account directly based on the court order.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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Retro Bob wrote:

- quote -

You understand wrong. If the funds are transferred from one
spouse under the QDRO to another spouse, and NOT rolled over
to another IRA, the funds are taxable BUT NOT SUBJECT TO THE
10% PENALTY.

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Retro Bob wrote:

- quote -

QDROs are reserved for pension plans not IRAs. IRA accounts
are divided based on the divorce agreement or property
settlement. The trustee of the IRA should be able to tell
you exactly what language should be in the divorce
agreement. The last thing you want to do is to take a
distribution and give it to your spouse. This would be a
taxable distribution and subject to the 10% penalty if it is
an early withdrawal. You want the funds transferred from
your IRA account to the other spouse's IRA account.

The only way for the owner of an IRA to avoid taxation and
the 10% penalty when a divorce requires a division of
property is for the funds to move from one spouse's IRA to
the other spouse's IRA.

When I used to handle this stuff I always insisted that the
following clause or something similar be added to the
divorce agreement:

"Any division of property accomplished by the transfer of
IRA account funds from one spouse or ex-spouse to the other
spouse or ex-spouse shall be deemed to be made pursuant to
this divorce settlement and is intended to be tax-free under
Section 408(d)(6) of the Internal Revenue Code."

--
Alan
http://taxtopics.net

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"Retro Bob" <uctraing[at]ultranet.com> wrote:

- quote -

QDROs do not apply to IRAs. However, there is a provision
that allows an IRA to be split in a divorce. After the
split, each spouse's IRA is their own account and subject to
all IRA rules including the 10% penalty for early
withdrawal.

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If I understand correctly... a QDRO can only be used to
transfer the IRA assets from the ownership of one spouse to
another, not provide a vehicle for the spouse to remove
money from the IRA with no penalty, correct ? In other
words, one spouse takes ownership of a portion of the IRA,
but that spouse does not gain any special access to the
money that they would not normally have to an IRA.

Is there any way that money can be *removed* from an (any)
IRA as part of a divorce settlement and *not* be subject to
the 10% penalty ?

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