While the interest is not subject to income tax, it must be reported on your federal income tax return. If you collect Social Security benefits, the interest is taken into account in determining whether and to what extent the benefits are includible in gross income. And if any of the interest is on private activity bonds, the interest likely is taxable for alternative minimum tax purposes.
A specialized domestic relations court order that conforms to IRS regulations and provides instructions to pension plan administrators and IRA custodians as to how to pay benefits to a divorced spouse.