Income Tax % w QDRO Cash Out


#1

My husband owes me $60k from his 401k. I want to buy him out of the house and would owe him $80k. He doesn’t agree to keeping his 401k intact because he wants cash. This makes it difficult for me to afford buying the house because even though I can add it to the mortgage loan, my payment and interest would be higher. What would be the tax amount I would pay if I ask to cash out the 60k in the QDRO? Thanks!


#2

The tax amount and early withdrawal penalties are determined at the time of the cash out. If he is to pay you $60,000 even in order to equalize the distribution of the marital estate, then he will have to incur the taxes and penalties unless you are able to negotiate a transfer of the retirement assets tax-free and penalty-free to you, then he can cash out his remaining portion if he so chooses.


Anna Ayscue

Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest

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