1099R in divorce

[lydia33]

Couple divorced in 2007. Husband had to give wife half on his retirement. The 1099R came in husband name. He wrote the wife a check for half per the divorce settlement. Does she not have to pay the tax on the part that she got? And how because it all is in his name? I should do both of the clients returns, too.

[taxtrio]

Was this a QDRO order?? (Qualifed Domestic Relations Order)... If so he should have presented the order to his pension people and they would have sent her the check directly, and sent her a 1099R in her name and Soc Sec #..

This is a fairly common mistake that people in a divorce make. They just want it over with and take the distribution and

give the ex-spouse a personal check.. OOPS! Now he has a taxable distribution, (and maybe a premature distribution penalty, code 1, if under age). If ex-spouse get's distribution directly from pension-- no code one due to QDRO, no penalty.

Usually he is just stuck paying the tax. Ex-spouse got a break. I suppose you could try to fight it out with IRS, send a letter with attached court order, you never know, it might get him out of it.

[Jack from Ohio]

Was this a QDRO order?? (Qualifed Domestic Relations Order)... If so he should have presented the order to his pension people and they would have sent her the check directly, and sent her a 1099R in her name and Soc Sec #..

This is a fairly common mistake that people in a divorce make. They just want it over with and take the distribution and

give the ex-spouse a personal check.. OOPS! Now he has a taxable distribution, (and maybe a premature distribution penalty, code 1, if under age). If ex-spouse get's distribution directly from pension-- no code one due to QDRO, no penalty.

Usually he is just stuck paying the tax. Ex-spouse got a break. I suppose you could try to fight it out with IRS, send a letter with attached court order, you never know, it might get him out of it.

QDRO only applies to 401K. Other retirement plans have to be distributed to the employee. The tax consequences should have been taken into account as part of the settlement order.

[joanmcq]

I've seen other pension plans split...CSA-1099-Rs for one, state of CA pensions. If done right, spouse gets his or her own 1099. If this was an IRA, it could have been split, and part go to an IRA in the wife's name. What kind of account was it? Although at this point, he is pretty much hosed. Another, why don't they call us first moment!

[jainen]

>>He wrote the wife a check for half per the divorce settlement. Does she not have to pay the tax on the part that she got?<<

No, of course not. She didn't get any income, just a share of property value that was already hers. Does the divorce settlement say anything else? Apparently he could just write her a personal check for the amount, so it didn't necessarily have to come from a particular account. If he chose to withdraw money instead of borrowing or selling other assets or even negotiating a different settlement, who are we to start adding new provisions?