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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 * * *.
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Last modified: May 25, 2011