- 6 - distribution check to his wife, rather than first depositing the funds in his own bank account, does not change the result. Section 408(d)(6) offers a means to avoid having the interest transfer treated as a distribution. See sec. 1.408-4(g)(1), Income Tax Regs.2 It does not permit the IRA participant to allocate to a nonparticipant spouse the tax burden of an actual distribution. See Bunney v. Commissioner, supra at 265, n.7. We recognize that where a nonparticipant spouse in a divorce prefers to receive cash rather than an interest in an IRA, the parties may find it desirable to have the participant simply withdraw the IRA funds. However, such withdrawals do not fall under the limited exception set forth in section 408(d)(6). Respondent also contends that the transfer was not made under a written instrument incident to a divorce decree within the meaning of sections 408(d)(6) and 71(b)(2)(A). In light of our holding above, it is unnecessary to decide this issue. 2Sec. 1.408-4(g)(1), Income Tax Regs., provides, in relevant part: The transfer of an individual’s interest, in whole or in part, in an individual retirement account, individual retirement annuity, or a retirement bond, to his former spouse under a valid divorce decree or written instrument incident to such divorce shall not be considered to be a distribution from such an account or annuity to such individual or his former spouse * * *.Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011