If divorce settlement proceeds were to be paid out of husband's 401k, am I responsible for paying the taxes and penalties

Note that I am not licensed to practice in your state.

What they're saying, if I read you correctly, is untrue. When you do a property division in a divorce proceeding, retirement accounts are controlled by a creation of federal law called a Qualified Domestic Relations Order (QDRO). When executed properly, there are no taxes or penalties associated with dividing up retirement accounts.

You need to consult with a local divorce attorney to help you draft a QDRO. If you don't have a lot of money, I'm sure you can find an attorney that will charge you simply for the cost of drafting the QDRO. It's a couple of pages of legal documents and shouldn't cost you an arm and a leg.

I would advise speaking with your divorce attorney regarding a Qualified Domestic Retirement Order (QDRO). There are limited tax consequences to divorce settlements when done correctly. The Order should help you determine how to address the potential tax issues you are running into.