At the end of the year many people make charitable gifts or fulfill pledges to charities. Some of the pledges can be substantial. And the money to make those tax deductible gifts usually comes from after-tax dollars.
With an In-Marriage QDRO, 401(k) money from one spouse's account can be paid in cash to the other spouse. That cash then can be given to the charity. The key thing here is that pre-tax money has been used and the married couple can take a tax deduction. Double bonus! Charitable gifts are one of the few tax deductions still available.
I want to stress that 401(k) money that is transferred doesn't have to sent to an IRA for ...
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What can an In-Marriage QDRO do for you (3).
Say that a married couple wants to accelerate Required Minimum Distributions and there is an age gap in their ages. Then transfer some 401(k) money from the younger spouse to an IRA for the older spouse.
Result? Cash now for the married couple. That money can be used and enjoyed now rather than in the future.
If you have questions about the IMQ, contact me. ...
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What can in In-Marriage QDRO do for you (2)
Say one spouse is older than the other spouse; it could be five years or ten years older. Further suppose the older spouse wants to defer the Required Minimum Distribution (RMD) because the couple wants that money to grow in the tax deferred account for a longer period of time.
The solution is the In-Marriage QDRO. Transfer the older spouse's 401(k) money to an IRA owned by the younger spouse. The numbers can be very significant due to the magic of compound interest and no taxes. As usual, at least $100,000 should be transferred.
Contact me if you want to learn more. ...
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