@Oliver7088
If you want to change the status quo, you will need to see an accountant who has experienced in these matters, because we don’t have a lot of experience with the situation.
There are two basic principles here that sound like they are in conflict with each other but really or not. One is that transfer of assets during a divorce is not a taxable event. However the second is that you always pay tax on a tax deferred retirement account whenever you take the income, because no tax was paid on the contributions. If we apply that to a private company where an employee has a 401(k), when spouse can be required to transfer a portion of the 401(k) balance to the other spouse and that transfer is not a taxable event. However, when the ex spouse withdraws the money, they will pay income tax because withdrawing money from a tax deferred retirement account is always taxable, even though the initial asset transfer was not taxable.
Applying these concepts to your situation, currently you are paying tax on the portion of the retirement income that you receive, and your ex pays tax on the portion of the retirement income that they keep for themselves. This is correct and proper, because even though the transfer is not considered taxable alimony, the recipient of tax deferred retirement income always pays the tax. And this is what would be happening if you met the 10 year rule and were getting your own 1099R.
If you want to change the arrangement, the only other way to handle it would be for your ex to receive the entire retirement income and pay all the tax on it, then send you a payment. Because this is not alimony according to your divorce agreement, he could not deduct the amounts he sent to you and they would not be taxable to you. That means he’s paying tax on the entire amount and you’re paying no tax, so the only equitable solution would be for him to reduce the amount of money that he sends you. He would send you the after-tax portion and not the gross portion.
Because of the way the tax brackets work and because of how Social Security is taxed, it is likely that if he was paying tax on the entire pension, he would be paying more taxes than the two of you pay in combination under the current system, so there would be less money to go around for you.
If you were to demand the full gross portion and not pay any tax on it, you would not be supported by any equitable argument or by the law, and your ex would have every right to go back to the court and ask for a modification. (In fact however, given the status quo, it sounds like you would have to go to court to request a modification, and you would not be able to make an equity argument because you would be asking for your ex to pay all the taxes and for you to get the money tax free which would be inequitable to your spouse.
I hope this explanation helps you understand the tax position in the equities of the situation. Someone always has to pay tax on a pretax pension.
