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Old 07-15-2003, 02:21 AM
venables4
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divorce as a tax tool

What is the name of your state? Washington
Couple married over 20 years, 10 years apart in age, substantial IRA that the IRS considers property of the younger (previously pension account from employer). Older turns 59 1/2 soon, is it legal to divorce to transfer IRA to older partner in property settlement, then remarry, avoiding the IRS 10% early withdrawal penalty when accessing IRA funds?
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Old 07-15-2003, 12:58 PM
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Join Date: Aug 2002
Location: Washington
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If they divorce & remarry *just* to get around the tax laws, this would be considered a tax-motivated transaction and the IRS could ignore it (and possibly assess penalties for such tax avoidance behaviour) if the IRS found out about it. However, if they divorce and just keep living together, the IRS cannot complain. Also, one person will take all the itemized deductions and the other claims the standard deductions. Both file as single.
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