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Early withdrawal from 401K

by | May 19, 2014 | Distribution, Firm News, Retirement Plan |

The Internal Revenue Service reported that in 2011 it collected $5.7 billion in penatlies as a result of early withdrawals from 401K plans.  In that year, Americans took roughly $57 billion from their 401K plans as early deductions.

Normally, the distribution from a 401K plan as a result from a dissolution of marriage can be managed so that there are no penalties or taxes as a result.  However, early withdrawals from a retirement plan create another set of problems which needs to be addressed in a dissolution of marriage.  Depending on when the withdrawal occurs, such an early withdrawal can create a joint tax liability.