What happens to my IRA when I get divorced?

An IRA can be divided between spouses in a divorce without triggering taxes or the 10% penalty, but only if it's done correctly. Unlike a 401(k), which requires a qualified domestic relations order, an IRA split is handled through a transfer incident to divorce spelled out in the divorce decree or settlement. The money moves directly from one spouse's IRA to the other's via a trustee-to-trustee transfer; if you instead take a distribution and hand over cash, you'll owe tax and possibly penalties. The receiving spouse then owns the IRA outright with the same rules. Get the language right in the decree. Confirm the transfer-incident-to-divorce rules at irs.gov.