cashed in 401k for divorce expenses

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Mar 3, 2006, 04:45 AM

funnyface

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Join Date: Mar 2006

Posts: 1

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.

Answers

Mar 3, 2006, 08:26 AM	#2

AtlantaTaxExpert Tax Expert Join Date: Feb 2005 Location: Atlanta, Georgia Posts: 9,787	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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