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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 12692
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Hello, as part of a divorce settlement, I need to transfer

Resolved Question:

Hello, as part of a divorce settlement, I need to transfer all funds in a Self directed IRA (USAA) to my soon to be ex-wife, who itends to put it an IRA at this point (i.e. not withdraw it). I have two questions. First, assuming we make this transfer after our decree, I would like confirmation that this event is non-taxable for both of us (federal and state)? And, second, I would like clarification as to whether of not a QDRO is needed?
Submitted: 9 months ago.
Category: Finance
Expert:  Megan C replied 9 months ago.

Megan C :

Thank you for your question, and thanks for using JustAnswer.com. How are you doing today?

Megan C :

A QDRO applies to qualified plans, 403(b) plans, etc - but not IRAs. The term "transfer incident" is applicable to IRAs.

Megan C :

The IRA assets can be transferred with the language of the divorce decree.

Megan C :

This transaction would be non taxable, except if the spouse receiving the benefits decides to take the distribution instead of placing it into their own account. You say your ex intends to rollover the assets. She will not be taxed until she takes this amount out.

Megan C :

The transaction will either be a rollover or transfer, depending on the terminology used by USAA or her chosen IRA custodian.

Customer:

Megan,

Megan C :

The divorce decree or separation instrument MUST BE approved by the court for this to be a non-taxable transfer

Customer:

I believe my agreement covers the transfer, and it's my itent to wait until after the decree to initiate a transfer. Her is the wording:

Megan C :

okay

Customer:

Full Size Image

Customer:

Not sure if you can read what I posted.

Megan C :

I actually cannot.

Megan C :

Can you copy and paste the words instead of uploading a picture?

Megan C :

It's not letting me view a full sized picture - Just a little tiny scrunched up version of what you sent.

Customer:

Yes,

Megan C :

The wording seems appropriate. I was able to save the image and view

Customer:

Husband shall transfer the following Investment/Retirement accounts to Wife within sixty (60) days of the Decree of Dissolution is issued. The parties shall share equally the cost to prepare a Qualified Domestic Relations Order.


 



  1. USAA IRA Account # XXXXX in the approximate amount of $178,783.49

Megan C :

Yes, this sounds appropriate, but remember this must be approved by the court in order for it to be valid and this to be a non-taxable event

Megan C :

Here's a good article explaining this:

Megan C :

CLICK HERE

Customer:

Well, if the court does not approve it, then I guess I'm obligated to make the transfer.

Customer:

Thx for the article.

Megan C :

Your welcome. Also, if this is just an IRA, a QDRO is not necessary

Megan C :

A QDRO is only necessary for plans that must meet requirements under ERISA

Megan C :

such as 401(k), 403(b) etc

Megan C :

I don't see why the court would not approve it...if you are in agreement about the divorce once it's final it's agreed on.

Megan C :

Here's another excellent article. The part you want is on page 3 (of the text, past all the table of contents etc) CLICK HERE

Customer:

Yes, I think my lawyer is being over conservative and slightly misinformed. USAA, my investement firm basically confirmend what you are saying but they sounded like they were reading from a script. One clarification question, USAA calls my account a Self directed IRA and I could not confirm that this follows the same guidelines as Trad IRA.

Megan C :

Self directed just means you have more control over your investment

Megan C :

It is a traditional IRA, but you control the investment

Megan C :

some IRAs only allow you to have certain fundfs

Megan C :

funds

Customer:

THanks, XXXXX XXXXX my questions.

Megan C :

You're welcome. If you would, please take a moment to rate my response as "Excellent" so that I may receive credit for assisting you today

Megan C :

And share that second article with your lawyer - it was written for lawyers

Customer:

will do

Megan C :

Thanks so much!

Megan C :

I wish you the best of luck

Megan C :

The rating feature is located along the bottom of your screen, 5 stars/smileys gives full credit.

Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 12692
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 4 other Finance Specialists are ready to help you
Expert:  Megan C replied 9 months ago.
Thanks, Scott for the opportunity to assist you today. It was a pleasure working with you. Please come back and visit me for any tax, finance, or social security question you may have. Thanks again.

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