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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75402  
Subject: Re: Divorce/Retirement Date: 1/19/2010 10:53 PM
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In a nutshell he is 60 and she is 57. The divorce is very amicable. As I understand he is transferring X amount of dollars to her from his 401K/IRA. Since he is 59 1/2 can he do this without penalty?

In a divorce situation, this can be done without penalty no matter what age. It's called a QDRO (pronounce Quad-ro; Qualified Domestic Relations Order). It will transfer to her pre-tax, and she will have the ability to withdraw the money when she desires and pay taxes on it at that time.

If he withdraws the money from the account, rather than using a QDRO, he will owe tax on the distribution, so it's probably in his best interest to use a QDRO.

Are there limtations to the amount?

Generally, what is negotiated by the parties.

What are her tax consequences in receiving this money?

Assuming he uses a QDRO to transfer the money to her, she will pay taxes on the withdrawals.

AJ
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