What Happens to Required Minimum Distributions in an Illinois Gray Divorce?

 Posted on July 14, 2026 in Asset Division

If you are getting divorced in 2026 and are already required to take minimum distributions, your withdrawal schedule does not pause. The Internal Revenue Service (IRS) still expects you to take money from your traditional IRA or retirement plan on time while you and your spouse divide marital property. These mandatory withdrawals can create timing and tax problems that are easy to overlook. 

A Kane County, IL gray divorce attorney can help you understand how these withdrawals interact with retirement account divisions and help you avoid costly mistakes in a divorce settlement. 

How Are Retirement Accounts With RMDs Divided in an Illinois Divorce?

Under the Illinois Marriage and Dissolution of Marriage Act, 750 ILCS 5/503, most property acquired during a marriage counts as marital property. This can include the marital share of retirement accounts, even when the account owner has already started taking required minimum distributions (RMDs).

Section 503(d) lists several factors courts must weigh when dividing this property. These include the length of the marriage, each spouse's age and health, and each spouse's future earning power. Courts divide marital property equitably, but not always in equal halves.

An account that is already paying RMDs may require extra planning. The parties should consider its current balance, the taxes due on withdrawals, and any distributions taken while the divorce is pending. 

Do Required Minimum Distributions Continue During an Illinois Divorce?

An RMD is generally based on the account balance as of December 31 of the prior year and an IRS life expectancy factor. Your plan administrator or IRA provider may calculate the amount, but the account owner remains responsible for taking the correct distribution.

Filing for divorce does not change who owes the withdrawal. The spouse named on the account stays responsible for the correct RMD until a court order actually transfers part of the account to the other spouse.

Dividing an account during the year can complicate the RMD. A QDRO may be needed to divide a 401(k) or another employer retirement plan. An IRA is usually divided through a tax-free transfer incident to divorce authorized by the divorce judgment or settlement agreement. The order or settlement should state who will take any RMD due for that year and how the withdrawal will affect the property division. After the transfer, each former spouse is generally responsible for withdrawals and taxes from the retirement account held in that spouse’s name.

Can a Required Minimum Distribution Affect Your Divorce Settlement?

An RMD affects your settlement in two main ways. First, Illinois courts can consider each spouse’s income, property, and retirement benefits when deciding maintenance. An RMD is generally taxable income and may impact the financial information used in the maintenance decision. Second, it lowers the account balance before the remaining funds are divided, which changes what each spouse ultimately receives.

Because of this, the settlement should explain how any RMD taken during the divorce will be credited between the spouses. It should also address who receives the funds and who is responsible for the related taxes.

What Happens if You Miss an RMD During Your Divorce?

During a contentious divorce, retirement accounts often get set aside as spouses focus on other issues. However, missing an RMD deadline comes with a specific financial penalty.

Under current IRS rules, a missed required minimum distribution triggers an excise tax. This is a penalty the IRS charges on the amount you should have withdrawn. The tax equals 25 percent of that missed amount. It can drop to 10 percent if you fix the mistake within two years. This penalty comes on top of the regular income tax owed once you finally take the distribution, so a missed RMD during a drawn-out divorce case can quietly cost thousands of dollars. 

The account owner remains responsible for making the correct withdrawal each year, and the income from it can affect both taxes and settlement terms. A few practical steps can help protect your interests.

• Confirm the RMD deadline and amount for each retirement account before your divorce is finalized.

• Ask your attorney how a pending or completed RMD could affect maintenance or property division.

• Keep documentation of every withdrawal in case questions arise later in the settlement process.

Planning ahead for these deadlines gives both spouses a clearer picture of what they are actually dividing. 

Schedule a Free Consultation with a Kane County, IL Gray Divorce Attorney

Gray divorce brings a wide range of financial and legal issues. The attorneys at Divorce Over 50 - Goostree Law Group help clients manage retirement accounts, asset division, and the many other concerns that come with divorcing later in life. Contact a St. Charles, IL divorce over 50 lawyer today to schedule your free consultation. Call 630-634-5050.