A husband could satisfy a $120,000 installment payment he owed to his ex-wife under their divorce agreement by transferring some of his retirement benefits to her, a Virginia court recently ruled.
The wealthy couple’s divorce decree required the husband to pay the wife a total of $1.2 million in 10 annual installments.
To make his first installment payment, the husband transferred to the wife $120,000 from his rollover IRA and 401(k) plans.
The wife argued that this violated the divorce decree because, due to taxes and penalties, she would net only $61,000 if she cashed out the retirement benefits right away.
But the court sided with the husband. It said the installment payment was okay because the property he transferred to his wife had a value of $120,000 at the time of the transfer.