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I have been married for 29 yrs and my husband has asked for…

Customer Question
I have been married...

I have been married for 29 yrs and my husband has asked for a divirce he is having a affair. He is giving me a portion of his 401k Will there be taxes taken out. I am almost 54 and have been a homemaker all of our marriage. do we need to see a tax attorney ?

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

The amount is 230,000 from 401k

Submitted: 3 months ago.Category: Tax
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Answered in 1 minute by:
3/8/2018
Tax Professional: Robin D., Senior Tax Advisor 4 replied 3 months ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 18,035
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

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Customer reply replied 3 months ago
Thank u
Tax Professional: Robin D., Senior Tax Advisor 4 replied 3 months ago

A qualified domestic relations order (QDRO) is a special court order that grants a person a right to a portion of the retirement benefits his or her former spouse has earned through participation in an employer-sponsored retirement plan.

In a QDRO, the person who earned the benefit is called the “participant” and the person who is designated to receive a share of that benefit is called the “alternate payee.”

As the alternate payee, you can have the portion you receive placed in an IRA. You do not pay tax on the transfer and then you take out only when you need it. It is then that you pay tax but only on the amount you take out.

Your divorce attorney can set this up for you and make sure the retirement plan receives the documents they need to make this happen for you.

Please let me know if you need more information.
If not then please scroll up to see the STARS to rate so I am credited.

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Customer reply replied 3 months ago
What happens if you want to take cash and put it in checking acct
We want to do one lump sum to pay off debt and give rest to me.
I have a piece of paper that states as long as u use qdro there are no tax repercussions and the irs does not treat the transaction like a withdrawal can the sum go into cheking acct. or is there a penalty?
Tax Professional: Robin D., Senior Tax Advisor 4 replied 3 months ago

If it does not go into another tax deferred account (pension plan or IRA) you pay tax on the lumpsum.

You would not pay a penalty if you use a QDRO but you will be taxed. The 10% penalty is only waived if you use a QDRO and do not put the amount in the IRA not the income tax.

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Tax Professional: Robin D., Senior Tax Advisor 4 replied 3 months ago

If you use the QDRO , take out the amount , and put it in a regular savings or checking account, you will pay tax on the full amount you get but you will not have a penalty.

Please let me know if you need more information.
If not then please scroll up to see the STARS to rate so I am credited.

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