Academic journal article Journal of Accountancy

Line Items

Academic journal article Journal of Accountancy

Line Items

Article excerpt

No Pension for Wife No. 1

* A couple was married for 26 years, during which time the husband was covered by his employer's qualified pension plan. The couple divorced, and the subsequent property settlement did not cover his pension benefits. The husband remarried. Eleven years later, he retired and began receiving a pension from his former employer. When he died, his second wife continued to receive half of the pension.

Upon the death of her ex-husband, the first wife filed suit and requested the court to issue a Qualified Domestic Relations Order (QDRO) that recognized her as the beneficiary of her former husband's pension.

The court denied her request. It held that because she failed to obtain a QDRO prior to her former husband's retirement, his second wife was irrevocably entitled to the pension benefits. (Rheba Hawthorne Franklin Rivers v. Central and South West Corp., 5th Cir. 9-7-99.)

IRS Forces Early Exit

* A taxpayer owed back taxes, but had only enough assets to pay half of the outstanding balance.

Although the taxpayer was vested in his employer's pension plan, he decided against using his pension to pay the taxes he owed. He told the IRS he intended to wait until reaching normal retirement age before using the benefits.

The IRS collection agent working on the case felt the taxpayer was being uncooperative and asked if the IRS could elect early retirement "on behalf of" the taxpayer.

In a legal memorandum, an IRS senior technical reviewer concluded the service could levy and collect taxes on retirement benefits when a taxpayer is eligible for early retirement. According to the reviewer, the IRS can make such an election for the taxpayer even though the retirement would result in a substantially reduced benefit (ILM 199936041). …

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