(MONEY Magazine) – In Money Helps (March) in providing an answer to a question about IRA assets in a divorce settlement, you may be mistaken. Internal Revenue Code Section 408(D)(6) and IRS Letter Ruling 8649053 both state that the transfer of an individual's interest in an IRA to an ex-spouse under divorce decree is not a taxable event, nor would there be a penalty imposed because of premature distribution.

Lee Farruggio Assistant vice president Bank of Long Island West Islip, N.Y.

-- Yes and no. If an IRA, or part of one, is transferred from one party in the divorce to the other under the court's divorce decree, then, as you suggest, there are neither taxes nor penalties. If one party in the divorce withdraws a portion or all of an IRA and uses the cash to meet financial obligations brought about by the divorce decree, however, then that party could face an early-withdrawal penalty if he or she is under age 59 1/2, and the proceeds will also be taxable.