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Divorce and a new IRA
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September 6, 2000: 4:37 p.m. ET
Received money from a settlement? Roll that sum into an IRA
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NEW YORK (CNNfn) - Receiving money from a divorce settlement can bring up all kinds of issues, the most immediate of which is 'what am I supposed to do with this money?'
In response to a reader's question, Deborah Voso, a certified financial planner from Frederick, Md., and a member of the Financial Planning Association, talked about the advantage of rolling over the money into an IRA and then investing it.
Ask the experts a question
As part of her divorce settlement, my sister is entitled to one-half of her ex-husband's retirement -- for the time they were married. He has filed for his retirement, and she has received word that she will receive her half in a lump sum. She does not have an IRA, or any other retirement account. Can she open an IRA with this lump sum and call it a rollover for tax purposes? Or will she have to just accept the money and put it into a CD?
Yes, she can open an IRA. No, don't just accept the money and put it in a CD.
This probably falls under a Quadro, or a Qualified relations domestic order.
This lump sum can be rolled over to an IRA in her name. The money will be transferred from the current custodian to a newly selected financial institution. Both will have rollover paperwork to be completed.
It is possible the check may be "mailed" to her but it should be payable to the new custodian FBO (for the benefit of her name).
She can use a variety of financial vehicles, CDs Annuities, mutual funds, stocks, and so on. If she needs help, a financial adviser could work with her on the paperwork to make sure it's done in a timely and accurate way.
* Disclaimer 
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