removing funds without penalty
My client is age 52 and is getting money from her ex-husbands 401(k) via a QDRO. She plans on rolling the money over to an IRA but would like to know if there is any way to remove some of the money before it is rolled over or remove some money from the IRA, if it all goes in there, without incurring a penalty?
Thank you.
Permalink Submitted by Alan - IRA critic on Thu, 2014-03-06 03:46
Once the funds are in the IRA, they lose the QDRO exception, and she might be forced into a 72t plan from the IRA to be able to access funds before age 59.5. Yes, she could take a penalty free distribution from the 401k before doing an IRA rollover to tide her over for awhile, but that distribution would not be large enough to finance her needs for 7 years. With a large distribution, much would be lost to taxes.