If a transfer or distribution of retirement assets takes place in connection with a divorce proceeding, are income taxes due?
A. Done properly, transfers between spouses incident to a divorce or separation instrument are not taxable events for either the transferor or the transferee. Consult a tax advisor with experience in transfers incident to divorce for guidance on how to transfer retirement assets properly. Of course, previously tax-deferred income will be taxable to the transferee spouse upon withdrawal from a retirement account. However, under certain circumstances, the transferee spouse may avoid withdrawal penalties. Consult a tax advisor for guidance on how to do so.
Related Questions
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