Dividing An IRA

This article is the second part in a series on the division of retirement accounts during a divorce. Today, we are discussing the division of IRAs.

Even if the IRA is titled in spouse’s name alone, all amounts in the IRA that were earned during the marriage can be divided by the court. The transfer of amounts in an IRA does not require the use of a Qualified Domestic Relations Order (QDRO), which makes their division much easier than dividing a 401(k).

In Colorado, the judge is required to split assets “equitably.” This does not mean equally, and it does not mean that each spouse gets 50% of each account or asset. Thus, a judge could award each spouse their own IRA account, or could give the non-owner spouse a greater share of other property.

If a transfer is required, all that is needed is an order from the court. The owner spouse is then responsible for providing the order to the company holding the IRA and filling out the necessary paperwork. If the non-owner spouse does not already have an IRA, he or she will need to set up an IRA to receive the funds.

This type of transfer does not incur taxes, because it is considered a “transfer incident to divorce” under the tax code.

Do you have questions about retirement accounts belonging to you or your spouse? Call Katelyn to discuss the best way to divide them.