Split pension or take more cash out from home equity

JWStrokeme · 2021-08-17T20:06:34+00:00

Keep your retirement!!!! It’s yours you/you’re working worked for it keep it safe so she doesn’t take a cent of your pension.

DoctorVonBacon · 2021-08-17T20:07:52+00:00

It's a no-brainer. Keep your retirement.

throwawaytheresties · 2021-08-17T20:21:25+00:00

Keep your retirement, also note the 2 are not equal dollar for dollar. Most pensions have not had income tax deducted yet. $100 in today money is most likely worth more in tomorrow money.
Besides, who wants their ex to come knocking when you’re busy fishing or playing golf?

flapjackdavis · 2021-08-18T18:46:07+00:00

You can build more savings through more work, side hustle, promotion, etc. But you can’t make up for lost pension.

jimsmythee · 2021-08-17T22:09:31+00:00

Here is the deal.

Your retirement money is in a 401k or IRA. Those are pre-taxed dollars.

Your home equity is post-tax dollars.

So if you owe her 401k dollars, if she pulls that out, she takes a tax hit on it. No early withdrawal penalty, but she has to pay income taxes on it. Or if you pay her from your home equity.

So, look at it this way. Say you owe her $20k in 401k money. Those are pre-tax dollars. If she wants to spend that money, she's going to pay $5k in income tax on it (give or take) and in reality only has $15k.

So tell her, "If you want a cash settlement in lieu of 401k money, I'll offer you $15k in cash. Or you can take $20k in 401k Dollars. Pick one!"

When I got divorced, I owed my exwife 10% of the equity in my house. But we were fresh out of a bankruptcy the previous year, so the house was separate and sole property, but I couldn't refinance to pay her the 10% equity in Cash I owed her. So the judge offered that I could pay her in 401k dollars. My exwife was, STUPID! And she took the 401k dollars at one for one. So she lost 25% of the value of the 401k money by pulling it out. She didn't see that one coming.

Throwaway4120213 · 2021-08-17T23:26:33+00:00

Is the offer 20k less equity in exchange for 20k less 401k? At equal exchange - you are better off taking the money upfront because the house equity is post-tax and 401k is pre-tax. You take the 20k and put it in the same ETFs your retirements are currently and it will yield you more than the 401k at retirement.

If the offer is to exchange at 70c per dollar to account for the tax issue which is how it should be - so she pays you 20k less in home equity but gives up 30k in your retirement funds - then it is better to take your retirement funds because they can grow off a bigger base.

pegleg_legal · 2021-08-18T00:48:27+00:00

Child support can change - so any cash out will be a target. If it’s a significant nest egg you may want to consider a CDFA.

principledbeast1 · 2021-08-18T13:59:38+00:00

I found that certain financial institutions will NOT play ball with things like QDROs. You're better taking cash from entities where you have some pull or the least amount of extraneous parties.

Title	Split pension or take more cash out from home equity
Author	Longjumping-One-340
Upvotes	4
Comments	15
Date	August 17, 2021 8:00 PM UTC (4 years ago)
Subreddit	Posted in /r/Divorce_Men
Original Link	https://old.reddit.com/r/Divorce_Men/comments/p6b7ik/split_pension_or_take_more_cash_out_from_home/
Archive Link	https://theredarchive.com/r/Divorce_Men/split-pension-or-take-more-cash-out-from-home.1058212 https://theredarchive.com/post/1058212

Comments