He works for a large company. As a divorce settlement he wants to pay me with 401k through a "qdro" I will not be rolling it over. Because I need to and must take the cash payout. so when does this "tax" come out. Is it automatic? Or can I pay at the end of the year when I file my taxes? What would be the tax on it? I made under 17,000 last year. He makes 140,000. I am using it to pay off a loan so I have no payments. How much and when will I be taxed? Do I have to ask for it to state that I will pay the tax on it next april?
First of all, the QDRO should first go into a retirement account, such as an IRA. Rather then paying the loan off in one year, you will be in a lower tax bracket to take the money over two calendar years. Go to a good CPA and have him/her run the numbers looking at your 2012 and 2013 and subsequent years taxes. It is important that you run the numbers first, and then decide whether to pay off the loan to pay off the taxes, rather than visa versa. Some will depend upon other factors, such as your age an anticipated income over the next few years.
Marty Davidoff, [email protected], 732-274-1600. This answer is provided for general information only. You should seek advice from an attorney or tax professional.
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