Distribution from IRA

[Guest cjsanders]

An IRA owner wishes to have assets distributed via check made payable to his spouse. His election to have funds distributed is in writing (via custodian's distribution form), but what is your interpretation of the "distributee" or "payee"? Should distributions be required to be received by the IRA owner, or could payments be made to another individual (or entitiy, for that matter)?

Thanks in advance,

Chris

[Michael Devault]

A lot will depend on the custodial agreement. Most agreements that I've seen prohibit the custodian from distributing IRA funds to anyone other that the owner except in the case of death or pursuant to a QDRO.

Absent a QDRO, the owner will be taxed on the distribution regardless of whether the custodian makes it payable to the owner or his/her spouse. So, from a practical standpoint, the owner may as well take the distribution and give the money to his/her spouse when received. (Just like we all do every payday;) )

Hope this helps.