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Is there an option with 401K's to liquidate a portion in a divorce?

I am currently about a week out from filing for divorce. We are splitting peacefully and agree on most of the financial stuff. I am currently going back to school after staying home with the kids for the past 11 years. The only income I will get right away is alimony/child support and possibly cash from the 401k. I would use this to pay bills, etc. while I continue to get my degree. I know it is better to keep the 401k money invested, however, I don't really have a choice to do so right now and still live on my own. I may get a decent amount of financial aid money, but I cannot apply for that until we are legally separated. I'm sure there are tax deterrents for this- I'm hoping I'd have some cash left.

1 Answer

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  • Judy
    Lv 7
    8 years ago
    Favorite Answer

    If part of the 401K is transferred to the other spouse but the money is left in, it's not taxable. But it is if taken out.

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