Any tax guys out there? I have a 401k problem

1hogfan83

My ex wife split her 401k as part of the agreement.  We also split the value of her car half and half.  $9500 for the 401k plus $4000 for the car.  She’s taking the money for the car out of her 401k.  My lawyers paralegal told me that they would issue me one check for $13500.  Obviously I will put the 9500 in my work 401k. But what will happen to the 4000 when I put it in a high interest savings account?  Am I going to get taxed on money I’ve already paid taxes on?  I bought the car with money out of my own pocket.  Paying more taxes would be like taxing the money as if it never put in the 401k, paying sales tax on a car I don’t have and have already paid once.  Any help would be much appreciated.  Thanks

JerryBobCo

I don't recall having to pay taxes on any proceeds from my ex.  But, there were no proceeds from her to me.

My best advice is ask a good tax accountant.

BTW, if you find a high interest savings account, please share. 

Varmintmist

No no no...

IF she is taking a 13.5K draw on her 401K or closing it, make DANG sure that she is responsible for the taxes and penalties IN WRITING. There are going to be penalties and taxes at 30+ % and it is a MARITAL asset.

If you take a check from her 401K you might be paying the taxes on it. You need to transfer 9500 from her 401K DIRECTLY to a self directed IRA. (might as well diversify out of the work plan while you can) Do not take a check for that.

If SHE is taking a draw from her 401K to give you 4k for the car, make SURE that it is in writing that she is responsible for the taxes and penalties.

You could get hit with x # of years unpaid tax (the deferred tax on money put in the 401 + growth (standard), or growth (roth) )

Currently still in the market for a divorce so I am there to.

As to the 4000 going into a acct. It isnt income, it is part of a settlement, so you shouldn't be taxed with a extra 4K as income.