401K rollover to IRA

[mmmorno]

What is the name of your state?What is the name of your state? Maine
In an amicable divorce, considering giving wife my 401K worth $58,000. If she agrees to this, I'd like her to cash in her new IRA so we can split the cash. We have very little liquid assets and could use the money. What are tax consequences and is it even legal to do that?

 

[BleedingHeart]

Hello from Minnesota.
I think you better do your Math. It wasn't one of my forte's and got me
into trouble. The Ira's I don't know are they Federal or State run? The 401K's are Federal. Believe me, the FEDS always get your money. Even after a rollover, if you take it out early. First you will be hit with early withdrawl penalties of 10% or higher and then taxed about another 33% regardless of your tax zone or whatever they call it. If you want to lose 43%+ of your
money then go ahead. It's really nice you want to help your ex and yourself
but unless it is used for education you will pay. Do you really think your ex will share it with you? Think again. It would probably sit in the IRA for a long
time and making how much interest and in whose name? How many years till you can legally start withdrawing it and what will it be worth then?
Please do your math, I got robbed. Mary
Ever heard of Get Met it pays? Get Met you pay.

 

[wanabath]

oh ya, and include in with everything Mary has said, that this is now coming to you as income fo rthe current year, which will raise your income taxes on your regular income. My advise without knowing all the details would be dont do it. Look for other ways to invest your money than those "wonderful 401ks and ira's"

 

[BleedingHeart]

Thanks wanabath, for confirming my good advice

oh ya, and include in with everything Mary has said, that this is now coming to you as income fo rthe current year, which will raise your income taxes on your regular income. My advise without knowing all the details would be dont do it. Look for other ways to invest your money than those "wonderful 401ks and ira's"

Yes, the 33% would be taken off when you pay taxes the next tax year.
It can differ according to your income. I was just using the figure as a base.
It could be a bit more or less. I took a huge loss on mine because It was for
a needed Vacation. What, you are thinking, is a Needed Vacation? It turned out to be the last one with my Mother. She passed away 2 mo. after we returned. Double Ouch! ~Mary~