Finance

Have Finance Questions? Ask a Financial Expert Online.

Ask an Expert,
Get an Answer ASAP!

Finance

My name is XXXXX XXXXX my wife and I are going through a divorce.

Customer Question
In our divorce agreement I'm...
My name is XXXXX XXXXX my wife and I are going through a divorce. In our divorce agreement I'm suppose to give her a lump sum of $25,000 from my retirement IRA. This money was invested before tax so taxes must be paid when withdrawn. I realize that just transfering the money into a IRA in her name only is my best move because taxes don't apply. My question is if my wife will not agree to this plan will I be better off tax wise to withdraw the money in a check issued to me or a check in her name? Will the money be considered income for me regardless of who the check is made out to?
Submitted: 6 years ago.Category: Finance
Show More
Show Less
Ask Your Own Finance Question
Answered in 43 minutes by:
10/3/2011
Financial Professional: CGCPA, CPA replied 6 years ago
CGCPA
CGCPA, CPA
Category: Finance
Satisfied Customers: 3,820
Experience: 40+ years experience in taxes and financial planning
Verified

Welcome to Just Answer. I am here to help you resolve your tax and finance concerns. Please feel free to ask anytime you need extra help.

 

Hi Paul,

I understand your concern. The way in which you handle this will determine who is to be taxed and on what amount they will be taxed.

 

If you transfer the money to an IRA for your spouse, you will not be taxed (as you have stated) and she will not be taxed until she withdraws the money. Here is the IRS statement on that. After it I will continue:

 

Transfers Incident To Divorce

If an interest in a traditional IRA is transferred from your spouse or former spouse to you by a divorce or separate maintenance decree or a written document related to such a decree, the interest in the IRA, starting from the date of the transfer, is treated as your IRA. The transfer is tax free. For information about transfers of interests in employer plans, see Distributions under divorce or similar proceedings (alternate payees) under Rollover From Employer's Plan Into an IRA, earlier.

Transfer methods. There are two commonly-used methods of transferring IRA assets to a spouse or former spouse. The methods are:

  • Changing the name on the IRA, and

  • Making a direct transfer of IRA assets.

 

Changing the name on the IRA. If all the assets are to be transferred, you can make the transfer by changing the name on the IRA from your name to the name of your spouse or former spouse.

 

Direct transfer. Under this method, you direct the trustee of the traditional IRA to transfer the affected assets directly to the trustee of a new or existing traditional IRA set up in the name of your spouse or former spouse.

 

If your spouse or former spouse is allowed to keep his or her portion of the IRA assets in your existing IRA, you can direct the trustee to transfer the assets you are permitted to keep directly to a new or existing traditional IRA set up in your name. The name on the IRA containing your spouse's or former spouse's portion of the assets would then be changed to show his or her ownership.

 

If you simply withdraw the money and give it to her (NO transfer to an IRA) you will be taxed. However, if you wish to avoid paying the tax and she will not accept a transfer into an IRA in her name, you can transfer it to an IRA in her name and let her do the withdrawal. Then she will be obligated for the tax reporting and payment. It seems the fair thing to me that she is the one to pay tax on the amount she receives.

 

CGCPA
CGCPA, CPA
Category: Finance
Satisfied Customers: 3,820
Experience: 40+ years experience in taxes and financial planning
Verified
CGCPA and 87 other Finance Specialists are ready to help you
Ask your own question now
Ask CGCPA Your Own Question
CGCPA
CGCPA
CGCPA, CPA
Category: Finance
Satisfied Customers: 3,820
3,820 Satisfied Customers
Experience: 40+ years experience in taxes and financial planning

CGCPA is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Rakhi Vasavada

Rakhi Vasavada

Financial and Legal Consultant

2,608 satisfied customers

Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years

Megan C

Megan C

Certified Public Accountant (CPA)

2,218 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

Manal Elkhoshkhany

Manal Elkhoshkhany

Tutor

1,920 satisfied customers

More than 5000 online tutoring sessions.

JKCPA

JKCPA

CPA

844 satisfied customers

Bachelors degree and CPA with Accounting experience.

Eric

Eric

Financial Manager

559 satisfied customers

Loan servicing, counseling and real estate expert. Foreclosure Expert and Financial Planner.

R. Klein, EA

R. Klein, EA

Accountant

480 satisfied customers

TurboTax Expert. QuickBooks Certified Pro Advisor

Dimitry K., Esq.

Dimitry K., Esq.

Attorney

332 satisfied customers

NASD Licensed Rep, 1997-2001, Business Attorney

< Previous | Next >

Related Finance Questions
Move to another IRA. I currently have Rollover IRA with one
Move to another IRA. I currently have Rollover IRA with one investment company, and want to move all my funds to another investment company, and close the account with the first investment company. I … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
I am sole beneficiary (non-spouse) of a roth ira (the
Hello, I am sole beneficiary (non-spouse) of a roth ira (the designation was made with the account; ie, non-probate). It was my father's roth and he died in 2016. It is now dec 31 of the year after d.… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,797 satisfied customers
Have a Traditional IRA and Roth IRA I contribute to. The
Have a Traditional IRA and Roth IRA I contribute to. The Traditional IRA my employer matches my contribution. Question, does this mean I am covered by a retirement plan at work? I am reviewing questio… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
If I take money from traditional IRA before December 31st
if I take money from traditional IRA before December 31st and I don't need this money in 2018 can I put it back into traditional IRA ?… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
Is it better to take money from an existing IRA to a Roth in
Is it better to take money from an existing IRA to a Roth in 2017 or 2018? I CAN ONLY TRANSFER $7100… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I have to withdraw about $5000 from my IRA due to finances.
I have to withdraw about $5000 from my IRA due to finances. I am 57 years old. I am aware of the 10-percent penalty for early withdrawal and that I'd have to pay taxes on the $5000. My wife and I file… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
Would an IRA contribution from an single-member LLC in the
Would an IRA contribution from an single-member LLC in the US reduce the taxable income of the LLC? For example, let's say the LLC has $20,000 in profit but the individual makes two $5,500 IRA contrib… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
For 2017 what is the regular IRA contribution limit....Is
For 2017 what is the regular IRA contribution limit....Is this in addition to limits on SEP IRA? I am 62. Self Employed and have no other workplace retirement plans.....what is the limit on a SEP IRA?… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I have 2 Roth IRAs for my husband and I and we created an
I have 2 Roth IRAs for my husband and I and we created an LLC with professionally made up documents to own the LLC wiith our Roths. In the document it states we can buy and sell basically anything tha… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I have a self directed Roth IRA with TDAmeritrade, can I buy
Hello, I have a self directed Roth IRA with TDAmeritrade, can I buy and sell stocks without capitol gains, as long as I don't cash out or reinvest ?Thanks, Ken… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I had a question on moving an IRA account from a bank IRA to
I had a question on moving an IRA account from a bank IRA to a brokerage IRA. My uncle went to his local bank and let them know he wanted to move his account. They issued him a check but it's thebfina… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,797 satisfied customers
I am considering, possibly, moving my 401k to a IRA. I am
I am considering, possibly, moving my 401k to a IRA. I am just in the starting phase of this. I still need to speak with my accountant.The retirement company that handles my account has sent, at my re… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I inherited my father's IRAs. I have accounts with Fidelity
I inherited my father's IRAs. I have accounts with Fidelity and Schwab. One of my Schwab accounts is titled Inherited; the other is listed as a Roth. The Fidelity account is listed as an IRA. My quest… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I have a question on SEP IRAs? i have income from both a
i have a question on SEP IRAs? i have income from both a single member LLC and straight up schedule C self employment income. … read more
abci168
abci168
Principal
27 satisfied customers
Please help, I have a seld-directed IRA and I have questions
Please help, I have a seld-directed IRA and I have questions regarding rollovers from my traditional IRA … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
I had a IRA disallowed for paying property taxes directly. A
I had a IRA disallowed for paying property taxes directly. A rental home was sole asset. I sold the property 11/16. IRA started 3/6/12 as a rollover for $77,468. Property sold for $23,970 after taxes … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Quick Question on IRA withdrawals and deposits. Here is the
Hi. Quick Question on IRA withdrawals and deposits. Here is the scenerio: Withdrawals were made $3k/withdrawal for bills, etc., on the following dates: Nov 11, 2016 Nov 20, 2016 December 3, 2016Total … read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
Is an individual retirement annuity considered an Ira?
Is an individual retirement annuity considered an Ira? Trying to help my mother move this to her IRA that she has at another institution. Never heard of the term before but it has the acronym of an Ir… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,277 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x