I was asked if an ex-husband rolled over or transferred an IRA to his ex-wife could he
deduct this. I reseached this and this is what I understand:
IRC 72(t)(2)(B) allows a QDRO or qualified domestic relations order in which a judge
orders that an IRA be rolled over from an ex-husband to an ex-wife as alimony can be
NON-TAXABLE to the ex-husband and NOT deductible as alimony. It is a wash.
This will be a rare occurance for us to encounter.
In all other cases it appear to be a BAD idea for the ex-husband to roll over or transfer an IRA to an ex-wife. It WILL be taxable to the ex-husband and if he is less than 59 1/2 years old he will be subject to the 10% early withdrawal penalty also. It is likely that this will NOT qualify for an alimony deduction as it probably would not be a periodic payment and it might not be considered as being a CASH contribution. It is more likely a property settlement payment. I would appreciate all comments especially regarding the possible deductability of the rollover or transfer as alimony.
deduct this. I reseached this and this is what I understand:
IRC 72(t)(2)(B) allows a QDRO or qualified domestic relations order in which a judge
orders that an IRA be rolled over from an ex-husband to an ex-wife as alimony can be
NON-TAXABLE to the ex-husband and NOT deductible as alimony. It is a wash.
This will be a rare occurance for us to encounter.
In all other cases it appear to be a BAD idea for the ex-husband to roll over or transfer an IRA to an ex-wife. It WILL be taxable to the ex-husband and if he is less than 59 1/2 years old he will be subject to the 10% early withdrawal penalty also. It is likely that this will NOT qualify for an alimony deduction as it probably would not be a periodic payment and it might not be considered as being a CASH contribution. It is more likely a property settlement payment. I would appreciate all comments especially regarding the possible deductability of the rollover or transfer as alimony.
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