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Ajsweeden
New Member

Pension settlement

In my Divorce Decree ( 2021) it states that I’m going to receive 70k of my X when he retires. It doesn’t state that it’s alimony. In the state of Oklahoma can I get the whole lump sum without paying taxes? Do I have to claim the 70 on my taxes the coming year? 

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2 Replies

Pension settlement

If the transfer of funds is from his pension plan at work you should have a QDRO. That can be complicated and requires special knowledge. You should seek legal advice. 

Pension settlement

While in general, property transfers upon a divorce are not taxable, a pension is different.  The person receiving the pension must pay income tax on it, because it was not taxed when it was earned.

 

Let me re-phrase @Bsch4477 's answer.

 

Your ex should ask the court for a QDRO, qualified domestic relations order.  If your ex obtains a QDRO and files it with the pension payer, then your share of the pension will come directly to you, and will be taxable to you.  The pension payer will issue you a 1099-R.  You might be offered the opportunity of taking a lump sum or periodic payments, which would be a way to spread out the taxes.

 

However, if your ex does not obtain a QDRO, then the pension will be paid directly to your ex only.  The only way that you get any money is if your ex gives you money by check (or Zelle, or whatever).  Your ex will have to pay income tax on the entire pension, and then any money sent to you will be considered a transfer upon divorce and will not be taxable to you or deductible by him (since it is not described as alimony).

 

So in fact, the ball is entirely in your ex's hands, and whether you pay income tax depends on whether your ex seeks and obtains a valid QDRO from the family court.  Whether you can object to the QDRO is something you would have to discuss with your attorney.  

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-qdro-qualified-dome...

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