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I received part of my ex-wife's Roth IRA from divorce & put it in my Roth IRA. Is it a rollover, conversion, or recharacterization? Or does it count as a contribution?
During a divorce, I received part of my ex-spouse's Roth IRA. It was passed from trustee to trustee (no cash was ever in my hands) directly into my own Roth IRA. It was greater than the 5,500 allowed each year for a contribution. But if this was a rollover, conversion or a recharacterization then I don't think it's a contribution so I won't worry about exceeding the 5,500 limit.
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Retirement tax questions
After I posted this question I contacted the IRS. Here is their answer:
My transfer is considered an inherited Roth. Because, in my case, it is due to either a
1) Divorce or
2) Separate Maintenance Decree (such as a PSA, Property and Support Settlement Agreement)
it is considered a tax-free transfer. It is not a rollover, it is not a conversion, and it is not a recharacterization. It is also not a contribution. It is therefore not reported on my tax return.
So I don't need to report it at all on my tax-return and more importantly, there is no tax penalty.
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Retirement tax questions
However, you said that you "received cash" and put the money in your own Roth IRA, implying that a distribution was made to your ex-wife who gave you the money and a contribution was made by you to your Roth IRA. Under these circumstances, this would be a Roth IRA distribution reportable by your ex-wife and a new regular contribution by you. The amount contributed by you in excess of $5,500 would be an excess contribution.
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Retirement tax questions
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The taxable amount Distributions from an IRA increase your AGI and therefore can affect your Premium Tax Credits. You IRA distribution *is* part of you actual income.