Transferring IRA funds as result of divorce

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
cashisking500
Posts: 42
Joined: Fri Dec 02, 2016 1:08 pm

Transferring IRA funds as result of divorce

Post by cashisking500 » Wed Jan 09, 2019 4:38 pm

Hello. I’m hoping you all can help me. My parents recently divorced and a portion of my father’s IRA is owed to my mother as part of the settlement. A few questions, as I’m just not familiar with this:

- Should my mother open an IRA for this money to be deposited into? She currently just has an employer matched 401K
- If so, would you all suggest Vanguard for this?
- Any thoughts as to how this should be invested (she is early 60’s, planning to work until 65)
- Any tax implications regarding this transaction we should be aware of?

Thank you for your help!

Dottie57
Posts: 5019
Joined: Thu May 19, 2016 5:43 pm

Re: Transferring IRA funds as result of divorce

Post by Dottie57 » Wed Jan 09, 2019 4:41 pm

I think she will need an account. If Vanguard is the holder, then I think they will need the QDRO the court issues to split the account.

Others will chime in.

Topic Author
cashisking500
Posts: 42
Joined: Fri Dec 02, 2016 1:08 pm

Re: Transferring IRA funds as result of divorce

Post by cashisking500 » Wed Jan 09, 2019 4:52 pm

Thanks Dottie

Katietsu
Posts: 1711
Joined: Sun Sep 22, 2013 1:48 am

Re: Transferring IRA funds as result of divorce

Post by Katietsu » Wed Jan 09, 2019 5:01 pm

Yes, she should open an IRA. Personally, I would open it at the same institution that currently holds her ex-husband’s IRA. It is my understanding that IRA’s are split with a divorce decree not a QDRO. (The QDRO is used for workplace retirement plans.) If done correctly, there should be no current tax implications.

If she wants to later move the IRA to Vanguard, Fidelity or any other provider, she will be able to do so. But, if she wants to IRA can be split and moved in one step, I am not aware of any problem with this. I have just found that completing one task at a time usually produces less problems.

Hopefully, an expert will come along and confirm my information.

Topic Author
cashisking500
Posts: 42
Joined: Fri Dec 02, 2016 1:08 pm

Re: Transferring IRA funds as result of divorce

Post by cashisking500 » Wed Jan 09, 2019 5:58 pm

Thanks Katieasu

Alan S.
Posts: 7972
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Transferring IRA funds as result of divorce

Post by Alan S. » Wed Jan 09, 2019 11:42 pm

Katietsu wrote:
Wed Jan 09, 2019 5:01 pm
Yes, she should open an IRA. Personally, I would open it at the same institution that currently holds her ex-husband’s IRA. It is my understanding that IRA’s are split with a divorce decree not a QDRO. (The QDRO is used for workplace retirement plans.) If done correctly, there should be no current tax implications.

If she wants to later move the IRA to Vanguard, Fidelity or any other provider, she will be able to do so. But, if she wants to IRA can be split and moved in one step, I am not aware of any problem with this. I have just found that completing one task at a time usually produces less problems.

Hopefully, an expert will come along and confirm my information.

This is correct. The funds must be moved only by a direct trustee transfer to her TIRA account, or Roth IRA if she is receiving part of a Roth IRA. This transfer is not reported on Form 1099R or on either tax return.


If your father is subject to RMDs, his RMD for 2019 will not change as the result of a 2019 transfer and he must distribute the same amount as he would have without the transfer. If your father's IRA has any basis from non deductible contributions that he reported on Form 8606, then mother will receive a pro rated amount of his basis and should file a Form 8606 to report this basis when she first takes a distribution from the IRA.


When the portion of his IRA is transferred to hers, since her IRA should initially be opened at the same custodian, she will receive the same investments currently in his IRA. If they are not appropriate for her she can sell and reinvest within the IRA with no tax consequences. Finally, she should be sure to name her own beneficiary on the new IRA as soon as it is opened.

Bully3000
Posts: 17
Joined: Mon Jan 07, 2019 4:23 pm

Re: Transferring IRA funds as result of divorce

Post by Bully3000 » Thu Jan 10, 2019 9:37 am

I do not believe QDRO is required for IRA only 401k's

Post Reply