(601) 607-7373 Kvance@ponderains.com

By Sarah Brenner, JD
IRA Analyst

Question:

I have a question about an IRA split between my husband and me. I got half of his retirement IRA and I was wondering if I am responsible for the taxes if I was to withdraw the funds. Also, if I didn’t want all the funds in the account before I opened it, could I tell the custodian to give me a portion and put the rest in? If I could, would I be charged a penalty of 10%?

Thank you

Answer:

Handling an IRA in a divorce can be complicated. If you are awarded part of you ex-spouse’s IRA, the correct way to proceed is to directly transfer the IRA funds to an IRA in your name. This is a non-taxable transaction. If you then take distributions from this IRA, those distributions will be taxable to you. They will also be subject to the 10% early distribution penalty if you are under age 59 ½.

Question:

I just made my SEP contribution for the 2018 tax year. Can I convert these funds? If so, can I do it immediately or is there a waiting period?

Justin

Answer:

Hi Justin,

SEP IRA funds are available for conversion to a Roth IRA. There is no waiting period, so you can go ahead and convert those funds as soon as you want.

https://www.irahelp.com/slottreport/iras-divorce-and-roth-conversions-todays-slott-report-mailbag