My husband cashed out his retirement account to give to his ex wife in a divorce settlement. As a result he received a big tax bill. He has been advised that he can 1099 her (she lives in England) since the money was paid to her? Is that correct?

If the transfer of the 401(k) or IRA to the ex-wife was driven by a Qualified Domestic Reations Order (QDRO), then it's a non-taxable event to your husband. The plan administrator can handle this directly. However, if there was no QDRO, and especially if your husband took a withdrawal, then the bad news is that your husband now has a huge tax bill, which may include a 10% early withdrawal penalty. He can not simply palm that tax bill off on his ex. His attorney (he had one, right?) should have advised him of the complications here. See: Splitting the Retirement Accounts - Personal Finance - Marriage & Divorce - SmartMoney.com (http://www.smartmoney.com/personal-finance/marriage-divorce/splitting-the-retirement-accounts-9671/)