A Qualified Domestic Relations Order splits qualified plans between spouses with no 10% penalty and no tax.
IRC §414(p) allows a QDRO to divide a 401(k), 403(b), or pension between divorcing spouses. The alternate payee can (1) roll to their own IRA tax-free, or (2) take a cash distribution WITHOUT the 10% early-withdrawal penalty (still ordinary income) — the only exception to the age-59½ rule that survives divorce. Draft QDRO alongside the MSA; plan administrator must pre-approve.
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Three flavors of §6015 relief remove joint liability for a spouse's understated tax, deficiency, or unpaid balance.
Grantor trust for the benefit of an ex-spouse shifts income taxation to the lower-bracket recipient post-TCJA.
A properly-drafted marital agreement locks down separate ownership of pre-marital and gift/inherited assets.
In the year of separation, MFS can beat MFJ when incomes are lopsided, deductions are personal, or spouse is untrustworthy.
§408(d)(6) IRA transfers and §223(f)(7) HSA transfers pursuant to divorce decree are tax-free — no rollover rules apply.
Divorced spouses can still both claim §121 use/ownership tests via §121(d)(3) tacking — up to $500K exclusion preserved.
Property transfers between spouses (or ex-spouses within 1 yr / incident to divorce within 6 yrs) are tax-free.
With alimony non-deductible post-2018, restructure as property transfers, HSA/IRA splits, and unallocated support.