Legal Question in Family Law in Pennsylvania

Is this a regular 401(k) or a Roth 401(k)? It makes a difference whether this is funded with pre-tax or post tax dollars. Assuming its with pre-tax and is just regular 401(k), does your wife have a divorce lawyer? Why isn't the lawyer preparing a qualified domestic relations order (QDRO) to divide the money? Then your wife's share can be rolled into an IRA or other investment without tax liability. It depends how your wife is getting the funds, is the husband just taking out a $50,000 distribution and giving it to the wife? Or has a QDRO been done and the wife chooses to take a distribution? In the former scenario, I think the husband would be liable for any tax and the wife would be liable in the latter because the distribution comes directly to wife from the 401(k) plan administrator.

Getting a QDRO and rolling the money into an IRA until your wife reaches age 59 1/2 would be a better option than either party taking a tax hit. Your wife should speak to her divorce lawyer about this.