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 the other spouse. It can go to cash.
Contact me to learn more about the IMQ.
And Merry Christmas.