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Jacy, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 568
Experience:  Nine years individual income tax preparation and consulting
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Going thru a divorce. My husband has a savings program thru

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Going thru a divorce. My husband has a savings program thru his work and I will be entitled to approximately $90k lump. I need to know what I can do to eliminate or reduce my tax obligation. I need to buy a house and wanted the money to get it. Any help is appreciated.




If it is pre-tax retirement savings, then any distribution will be taxed to either him or you unless it is rolled over to and IRA account. Usually it is taxed to the recipient (you). If you receive the distribution due to a QDRO (qualified domestic relations order), you will not be subject to the 10% penalty.


There is really no way to reduce your tax if you plan on using the proceeds to buy a house. Hopefully, you will get some additional deductions on the home purchase.


Thank you for your question. Feel free to Reply with any additional concerns.



Customer: replied 6 years ago.
Just to clearify your answer I'll provide a bit more info. The program the savings is in is the Thrift Savings Program thru the work. This is pre- tax savings. Can I take this lump and deposit it straight into an IRA without any initial tax obligation/penalty ? If I only use the money for continued savings and not draw on it to purchase the house, will I only have to pay tax on what I withraw. Any suggestions on what is the best move once I have access to this money. Thanks very much.



Yes, you should be able to have the Thrift plan send the distribution directly to a new Rollover IRA account that you set up ahead of time. This will have no tax consequences, other than reporting it as a rollover on your tax return. Keep in mind that once the money is in the IRA, if you are under 59 1/2, any withdrawals will be subject to income tax AND a 10% penalty.


If the plan cuts you a check, they will be required to withhold taxes.


The best thing, of course, would be to roll the funds over to an IRA, and leave it until you retire. It will be costly to take early withdrawals.


I hope this is helpful. Let me know if you have any more questions,



Jacy and other Tax Specialists are ready to help you
Customer: replied 6 years ago.
Thanks for your response Jacy. What you've said confirms what I suspected but I wanted the expert advice.

You're welcome. I'm sure this is a stressful time, and taxes are just an added stressor.


Best wishes,