Can an IRA Be Transferred to Another Person? Divorce, Gifts, and Inheritance

An IRA cannot be transferred to another person during your lifetime. The tax code treats these accounts as strictly individual, and reassigning ownership to a child, parent, friend, or anyone else triggers immediate tax on the full balance. Two narrow exceptions exist: a transfer to a spouse or former spouse under a divorce decree, and a direct transfer to charity if you are 70½ or older. After you die, the account passes to whoever you named on the beneficiary form.

Why Lifetime Transfers Trigger a Full Tax Hit

Federal law defines an IRA as a trust created for the exclusive benefit of one individual or that individual’s beneficiaries.¹ Because the account is tied to one person, you cannot add a co-owner, retitle it in someone else’s name, or gift it to a family member while you’re alive.

If you try to move the account to another person, the IRS treats the entire balance as if it had been distributed to you. The full fair market value becomes taxable income in that year.¹ If you’re under 59½, add a 10% early withdrawal penalty on top of the regular tax.²

The IRS also lists close family members — spouse, parents, children, and their spouses — as “disqualified persons” for IRA transactions.³ Any direct dealing between your IRA and one of these people is a prohibited transaction, which causes the account to lose its tax-advantaged status. When that happens, the full balance is treated as distributed and taxable even if no money actually moved.¹

Giving Someone Cash After a Withdrawal

You can always withdraw money from your own IRA, pay the tax, and then give the net amount to another person. That gift follows ordinary gift tax rules. In 2026, you can give up to $19,000 per recipient per year without having to file a gift tax return.⁴ This isn’t really an IRA transfer though — it’s a taxable distribution to you, followed by a gift of cash. The recipient receives money, not retirement account status, and the tax-deferred growth stops the moment you withdraw.

The Divorce Exception

Divorce is the only situation in which IRA ownership can legally pass from one living person to another with no tax consequence. Transferring your interest in an IRA to a spouse or former spouse under a divorce or separation instrument is not treated as a taxable distribution.¹ Once the transfer is done, the account belongs to the receiving spouse for all future tax purposes.

What the Decree Needs to Say

Most custodians require the court order or separation agreement to include specific elements before they’ll process the move:

Clear language ordering a “transfer” of the account. Phrases like “awarded to” may be rejected because the institution needs to code the transaction as a non-taxable transfer rather than a distribution.
The IRA account number, or at least the last four digits.
The exact dollar amount, percentage, or specific assets to be transferred.
Certification by a judge or court clerk that the decree is in full force and effect.

If the decree is missing details, a separate property settlement agreement that references the account information can fill the gaps. Custodians will not accept instructions that require them to interpret or calculate, such as earnings or penalties as of a particular date.

Move the Money Trustee to Trustee

The cleanest method is a direct trustee-to-trustee transfer, with funds moving from one IRA custodian to another without anyone’s hands touching the money. If the custodian instead cuts a check to the receiving spouse, 10% is automatically withheld for taxes unless the recipient opts out.⁵

From that point, the recipient has 60 days to deposit the full original amount into their own IRA, replacing any withheld portion out of their own pocket. Miss the deadline and the withheld amount becomes taxable income, with a possible 10% early withdrawal penalty if the recipient is under 59½.⁵ A direct trustee-to-trustee transfer sidesteps all of this.

Transferring IRA Funds to Charity

Account owners aged 70½ or older have one more lifetime option: a qualified charitable distribution. You can send up to $111,000 per year directly from a Traditional IRA to a qualifying charity, and the amount doesn’t count as taxable income.⁶⁷ It’s the only way to move IRA money to a non-family recipient tax-free while you’re alive.

The payment has to go straight from the IRA custodian to the charity. If you withdraw first and then write a personal check, it doesn’t qualify. The receiving organization must be a qualifying charity under the tax code, which rules out donor-advised funds and private foundations. A QCD can also count toward your required minimum distribution for the year.

On your return, report the full distribution on the IRA distributions line, write “QCD” next to the taxable amount line, and enter zero (or the reduced amount) as the taxable portion.⁸ A separate one-time election allows a QCD of up to $55,000 to a charitable remainder trust or charitable gift annuity.⁶

How an IRA Passes After the Owner Dies

When an IRA owner dies, the account goes to whoever is named on the beneficiary designation form filed with the custodian. The will does not control this. If your will leaves the IRA to your daughter but the beneficiary form still names your ex-spouse, the ex-spouse gets the account.

Surviving Spouse

A surviving spouse has the broadest set of options. They can roll the inherited balance into their own IRA, treating it as if it were always theirs and basing future required minimum distributions on their own age. They can keep it as an inherited IRA and take distributions based on their own life expectancy, which can help a surviving spouse under 59½ who needs the money without an early withdrawal penalty. Or they can take a lump-sum distribution, which triggers income tax on the full Traditional IRA balance.

Most surviving spouses choose the rollover because it preserves the longest stretch of tax-deferred growth.⁹

The 10-Year Rule for Most Other Beneficiaries

For owners who died after 2019, most non-spouse beneficiaries must empty the inherited IRA by the end of the 10th year following the year of death.¹⁰ This 10-year rule, created by the SECURE Act, replaced the older “stretch IRA” that let beneficiaries draw distributions over their full life expectancy. The beneficiary opens an inherited IRA and manages withdrawals across that window.

Who Can Still Stretch Distributions

Five categories of beneficiary are exempt from the 10-year rule and can take distributions over their own life expectancy:⁹

A surviving spouse.
A minor child of the account owner, who can stretch distributions until age 21, at which point the 10-year clock starts. This applies only to the owner’s own children, not grandchildren, nieces, or nephews.
A disabled individual, as defined by the IRS.
A chronically ill individual.
A person not more than 10 years younger than the deceased owner, such as a sibling or close-in-age friend.

When one of these eligible designated beneficiaries eventually dies, the next person in line faces a fresh 10-year window measured from that death.⁹

When No Beneficiary Is Named

If the owner never named a beneficiary, or if all named beneficiaries died first, the account usually passes to the owner’s estate under the custodian’s default rules. This is generally the worst outcome. An estate is not an individual, so the 10-year rule doesn’t apply. Instead the IRA follows the pre-2020 rules: if the owner died before their required beginning date, the full balance must come out within five years.⁹ The funds may also have to pass through probate, adding months and court costs. Keeping beneficiary designations current after marriage, divorce, or a death in the family avoids this entirely.

What the Recipient Pays in Tax

Inherited Traditional IRA withdrawals count as ordinary income to the beneficiary, taxed at their own rate — anywhere from 10% to 37% in 2026.¹¹¹² Inherited Roth IRA withdrawals are generally tax-free as long as the account met the five-year holding period. If the Roth was less than five years old when the owner died, the earnings portion may be taxable.

A divorce transfer carries no tax at the time of transfer. The receiving spouse owes tax later, when they take their own distributions, under the same rules that apply to any IRA owner. A qualified charitable distribution carries no tax to anyone: the owner doesn’t report it as income, and the charity doesn’t pay tax on it either.

1
Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts
2
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
3
Internal Revenue Service. Retirement Topics – Prohibited Transactions
4
Internal Revenue Service. What’s New – Estate and Gift Tax
5
Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
6
Internal Revenue Service. Notice 2025-67 – 2026 Amounts Relating to Retirement Plans and IRAs
7
Internal Revenue Service. Important Charitable Giving Reminders for Taxpayers
8
Internal Revenue Service. Seniors Can Reduce Their Tax Burden by Donating to Charity Through Their IRA
9
Internal Revenue Service. Retirement Topics – Beneficiary
10
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
11
Internal Revenue Service. Publication 590-B – Distributions From Individual Retirement Arrangements
12
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026