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relief on QDRO payments

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ByHG

L1: relief on QDRO paymentsThe court issued a QDRO forcing payment on a mortgage from my IRA. I am 49, and question ifthe distribution should be subject to the 10% penalty on Federal income tax. The IRA is under my name, and the home was awarded to my ex. I received a 1099 for the full amount.2009-02-06 21:25, By: HG, IP: [173.22.53.48]
L2: relief on QDRO paymentsThe 10% QDRO early withdrawal penalty exception does not apply to IRA distributions, only to those from employer plans. However, if you received the 1099R, that indicates that your IRA was not first partially transferred to your ex. Is that reflective of the QDRO terms?2009-02-07 22:25, By: Alan S., IP: [24.116.165.60]

L3: relief on QDRO paymentsThe wording was for myself to pay $45,000 from the IRA directly to the mortgage holder. I am fairly certain this puts me outside of any relief, but wanted to be certain.2009-02-09 18:05, By: HG, IP: [173.22.53.48]

L4: relief on QDRO paymentsThere is definitely no relief from the penalty, being an IRA distributionto whichthe QDRO exception does not apply.The larger issue is that the penalty applies to the person who is taxed based on the 1099R. Sincethe 1099R wasissued to you, you wouldhave to report the income and also incur the penalty.But if the 1099Rdoes not reflect the terms of the divorce transfer order, then you need topresent this issue to the IRA custodian and have the 1099R issued to your ex. I would speculate that if the intent was for your IRA to satisfy the mortgage payment, and if your ex is in a lower bracket,you would have been better off if the order called for a grossed up IRA transfer based on the ex’s bracket , and then the distribution would be taken by the ex and taxed to the ex. If you are in the same bracket or filing jointly, then it does not make any difference how this was structured ifthe object was for your IRA to provide funds for the mortgage payment.Now, thenextquestion is which of you is deemed to have made the payment in which themortgage interest portion would be deductible? This would also be a major issue unless youqualify to filejointly.2009-02-09 18:38, By: Alan S., IP: [24.116.165.60]

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