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What are the tax consequences if the Participant takes a distribution?

Submitted by on Tuesday, 27 December 2016 10:41

Any distributions to the Participant directly from the retirement plan will be taxed to the Participant.  A QDRO cannot require that the taxes be paid by the Alternate Payee. There are certain exceptions under the Internal Revenue Code that will avoid the 10% federal penalty for early distribution.  Also, as a Participant you may be able to borrow from the plan.  You should check directly with your tax advisor and/or financial advisor to determine the best option for you.

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