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In a divoice. I am retired. My wife by law gets half my

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pension, $ 217,964.61. Now they want...
In a divoice. I am retired. My wife by law gets half my pension, $ 217,964.61.
Now they want 20% gross up for tax on the maximum transferable portion of my Omers pension of $ 217,964.61. Which adds up tp $ 54,491.15.
Do i have to pay this also?
Submitted: 5 months ago.Category: Tax
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Answered in 2 hours by:
11/18/2017
Tax Professional: Lev, Tax Advisor replied 5 months ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,694
Experience: Taxes, Immigration, Labor Relations
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When funds in the retirement plan are divided between spouses because of divorce - that is done based on QDRO - a qualified domestic relations order.

A spouse or former spouse who receives QDRO benefits from a retirement plan reports the payments received as if he or she were a plan participant. The spouse or former spouse is allocated a share of the participant's cost (investment in the contract) equal to the cost times a fraction.

If divided equally - your spouse would allocate 50% of your balance.

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Tax Professional: Lev, Tax Advisor replied 5 months ago

Your spouse may be able to roll over tax-free all or part of a distribution from a qualified retirement plan under a QDRO. If a person receiving QDRO payments is either the employee's spouse or former spouse (not as a nonspousal beneficiary), then he or she can roll it over, just as if he or she were the employee receiving a plan distribution and choosing to roll it over.

If however - you choose funds to be distributed to you - that distribution is taxable and subject to 20% withholding.

You will receive form 1099R reporting total distribution and withholding.

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