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posted Jun 5, 2019 3:09:39 PM

TT Online says I do not have to pay 10% early penalty on retirement funds I received and cashed in as an alternate payee under a QDRO. Others say no. Which is correct?

I received a distribution as court-ordered divorce proceedings from ex-spouse's retirement fund and had to cash in for living expenses. When I added amount distributed under TT's exception to an alternate payee under a qualified domestic relations order, the 10 % penalty was removed from the ongoing calculations. Yet other community sources say I still owe the 10% penalty. I prefer the TT version, but do not want to irritate the IRS. Which version is correct and why does TT say no early distribution penalty?

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1 Best answer
Level 15
Jun 5, 2019 3:09:41 PM

Yes, if the distribution is paid from your ex-spouse's retirement plan to you as an alternate payee under a QDRO, you can claim this penalty exception.  See section 72(t)(2)(C):  https://www.law.cornell.edu/uscode/text/26/72



1 Replies
Level 15
Jun 5, 2019 3:09:41 PM

Yes, if the distribution is paid from your ex-spouse's retirement plan to you as an alternate payee under a QDRO, you can claim this penalty exception.  See section 72(t)(2)(C):  https://www.law.cornell.edu/uscode/text/26/72