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Can I use a 457 and 401 k qdro to buy a house, divorce

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Can I use a...

Can I use a 457 and 401 k qdro to buy a house

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

divorce received two qdro today for 36000 and need to liquidate monies to buy a house

Accountant's Assistant: Is there anything else important you think the Accountant should know?

I make 16000 gross and have two minor children. I cannot afford huge tax and penalty consequences and would like to invest or borrow against funds to avoid liability and still buy a house

Submitted: 1 year ago.Category: Tax
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Answered in 11 minutes by:
3/21/2017
Tax Professional: Lev, Tax Advisor replied 1 year ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,986
Experience: Taxes, Immigration, Labor Relations
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you may use 401 k qdro distribution as you wish - and that is not subject to penalty.

but the distributed amount will be reported as your taxable

if you take large distribution - that might affect your refund.

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Tax Professional: Lev, Tax Advisor replied 1 year ago

With $16,000 current taxable income - depending on the age of your children - you might receive refund about $7500

that is because your might be eligible for Earned Income credit and Child Tax credit.

With additional $36,000 taxable distribution - your estimated balance due will be $1900

So the difference will be significant.

Let me know if you want to plan spreading distributions over several years.

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