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QUESTION DETAIL
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I received my ex husband's 401k in a alimony buyout and the tax was withheld. The 401k was a QDRO and I needed the money to pay my lawyer and mortgage so I didn't rollover it into my own retirement account. The total was $71,000 and I received about $43,000 and when I had my income tax return prepared, my accountant told me I owe the state about $3,300 and the IRS about $3,800 because it was considered income. I have been paying off my tax debt monthly and every month I just don't understand why I have to pay when I had taxes withheld originally. What could be the reason?
ANSWER
Expert Mark Anderson's Answer:
If you do not roll it over into another retirement account it is subject to tax and a 10% penalty. That is probably why you are paying so much. You should have your accountant explain it to you if you do not understand why you owe so much. I hope this answers your question.
