A QDRO has already been filed. It was almost 3 years ago. Rue person that was working on it for some reason stopped. I need to let her know if I want to roll it over or cash out. I really need the money but don't want to pay taxes twice.
Under the normal retirement plan distribution rules, if you are under 59 1/2, you will be taxed on whatever you withdraw, plus the amount of your withdrawal will be subject to a 10% early withdrawal penalty. If you are over 59/ 1/2, you would only be subject to taxes (no penalty).
There is a way to take withdrawals prior to 59 1/2 without penalty under Section 72(t) of the IRS code. It requires that you set up a series of "substantially equal periodic payments." There are restrictions and complexities to this process, so you will likely want to work with a financial advisor or your CPA to make sure you do things properly. Once you come up with a payment schedule, you must stick with it, or your withdrawals with be subject to taxes and the 10% penalty.
Hope this helps.
Tammie, if you received this 401k as a QDRO settlement, it will not be subject to a 10% penalty on distributions. only taxes. QDRO and Beneficiary non spousal pay out are not subject to a 10% penalty! the other question if its a good idea, I would suggest sitting down with a local RIA to see what alternative you might have. You do not need 72t as mentioned in the answer above, once again if you received a 401k plan as a QDRO proceeding there is no early withdrawal penalty on it here is the link : http://www.irs.com/articles/qualified-domestic-relations-order-qdro Here is the paragraph: With most QDROs, the person known as the alternate payee (not the primary holder) is taxed when the funds are withdrawn from the account. It is important to note that the 10% early distribution penalty does not apply here. Let me know if you have any questions, Best of Luck Michael
Similar to what has been said, if you need the funds then you need the funds. That being said, if you are under 60 years old, you should try and wait to take the funds to avoid any penalties.