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    funnyface's Avatar
    funnyface Posts: 1, Reputation: 1
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    #1

    Mar 3, 2006, 06:45 AM
    Cashed in 401k for divorce expenses
    I was wondering now that tax season is in full swing, if I could get a tax break on my 401k money that I cashed out. I was told at one time divorce could be used as a hardship. I have two dependants and I made $32,000 last year. Any information would be helpful. Thank you.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #2

    Mar 3, 2006, 10:26 AM
    FunnyFace:

    If the 401K was forced by the divorce as part of the settlement (under the exception for a Qualified Domestic Order), then you would not have to pay the 10% early withdrawal penalty.

    However, you do have to count the 401K distribution as normal income and pay the normal income taxes.
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