I’m 54 and will be getting a distribution from my husband’s 401k and from his rollover account. Will I get a tax penalty if I use it to help buy a house for me and the kids?
Receiving a distribution from your husband’s 401(k) pursuant to a qualified domestic relations order (QDRO) will not result in taxes being owed or other penalty.
However, if you withdraw the funds after they are transferred to you pursuant to the QDRO, then you will have to pay taxes and you may be subject to an early withdrawal penalty unless you opt to take cash for the 401(k) funds.
Anna Ayscue
Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest
Rosen Online | Unlimited confidential access to a North Carolina attorney for $199/mo - click here
The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service only, a full discussion with an attorney should be undertaken before taking any action. The information posted on this forum is available for public viewing and is not intended to create an attorney client relationship with any individual. These answers are provided for informational purposes only, a person should consult with their own individual legal counsel before taking any action that could affect their legal rights or obligations.
I didn’t realize I could get the cash in lieu of the QDRO. To be sure I understand, i will not get any kind of tax ramification if I choose cash?
You have to pay taxes regardless. And a cash option may or may not be available but you should check with the plan administrator.
Anna Ayscue
Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest
Rosen Online | Unlimited confidential access to a North Carolina attorney for $199/mo - click here
The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service only, a full discussion with an attorney should be undertaken before taking any action. The information posted on this forum is available for public viewing and is not intended to create an attorney client relationship with any individual. These answers are provided for informational purposes only, a person should consult with their own individual legal counsel before taking any action that could affect their legal rights or obligations.