Divorce, Both husband and wife have some medical and disabilityes. 2 layoffs in last 4 years for husband and 1 layoff and medical problems for wife. Wife is being awarded the 401k fully on 120,000.00 45 years old. How much if can avoid penaltys cand she be given. A estimate would do

Any distribution she takes from the 401(k) will be taxed as ordinary income, and then because she is 45 she will have to pay the 10% early wthdrawal penalty UNLESS she meets one of the following exceptions:

• Distributions are made as part of a series of substantially equal periodic payments beginning after separation from service and made at least annually for the life or life expectancy of the participant or the joint lives or life expectancies of the participant and his or her designated beneficiary. (The payments under this exception, except in the case of death or disability, must continue for at least 5 years or until the employee reaches age 59½, whichever is the longer period.) This is known as a section 72(t) withdrawal).
• Distributions due to total and permanent disability.
• You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income – up to the amount allowed as a medical expense deduction.
• Distributions to reservists while serving on active duty for at least 180 days.

An option may be for her to roll the 401(k) into an IRA and then take a distribution from there, as there are a few more exceptions available. This is something to consider if the money will be used for (a) health insurance premiums (assuming she is unemployed, (b) for first time home purchase, up to $10K ,or (c) for higher education expenses.