Q: Is a QRDO needed for IRA transfer in a Wisconsin divorce?
I am currently undergoing a Wisconsin divorce, and we have agreed to partially transfer part of a conventional IRA between parties. Our paperwork is in progress, and I want to know if a Qualified Domestic Relations Order (QRDO) is necessary for transferring funds from an IRA account.
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A:
In Wisconsin, dividing an Individual Retirement Account (IRA) during a divorce does not require a Qualified Domestic Relations Order (QDRO). Instead, IRAs can be divided through a process known as a "transfer incident to divorce." This method allows the transfer of IRA assets between spouses without triggering taxes or penalties, provided the division is clearly outlined in the divorce decree and properly executed
To initiate this transfer, you should provide your IRA custodian with a copy of the divorce decree or a court order specifying the division of the IRA. The custodian will then facilitate the transfer of the designated portion of the IRA into a new account in the receiving spouse's name. It's important to ensure that the transfer is labeled correctly to maintain its tax-deferred status.
If you're uncertain about the process or need assistance drafting the necessary documents, consulting with a family law attorney experienced in property division can be beneficial. They can help ensure that the division complies with legal requirements and is executed properly.
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