House and Retirement Settlement

Reflog1791 · 2024-11-06T18:10:39+00:00

You will likely have to do a qdro on your retirement account. It’s expensive.

If possible, keep your entire retirement unscathed and deduct the money owed to you from her buyout.

No numbers provided but I’ll tell you I kept my entire retirement and got bought out. The amount was just enough to squeeze a down payment on a new house. I came out of divorce smelling like roses by thinking long term 5 years out rather than trying to screw my ex into an unaffordable cash out refi and chopping my retirement.

Peace_and_Love40 · 2024-11-06T17:03:02+00:00

When one party buys out the other to keep the house, do they just pay the half of the equity? Or is it factored in that they then will have this property which will have great value in 20 yrs etc?

RevolutionaryLaw8854 · 2024-11-06T16:11:09+00:00

She writes you a check for your equity in the house. Where that money comes from is not your problem.

She can find a new boyfriend, her parents, cash out refi, whatever. It’s not your problem.

But yes, she owes you real money. You can also as other suggested trade for you the retirement money. Or she can take on other debt if you have it.

captainchippsixx · 2024-11-06T15:38:12+00:00

You can transfer the 401k with a special form usually citing divorce. Do you have to give her more than the equity? Can she refinance? Does she have a job?

I would keep the 401k. If you sold the house you pay realtor fees and have to fix it up. So your half would be less today.

jimsmythee · 2024-11-06T15:17:32+00:00

Here is the deal.

Money owed to you from your equity interest in the house is in POST-TAX real dollars.

Money owed to her from your retirement is in PRE-TAX dollars.

Don't let her do a $1 for $1 offset in the money owed on house for retirement dollars.

Because yes, she would most certainly try to do that!

bluephotoshop · 2024-11-06T13:32:52+00:00

Yes,keep your retirement.
And it’s very true that divorcees get the house quite often in the divorce, but eventually are unable to afford it, ending up house poor.

Gattsama · 2024-11-06T09:11:29+00:00

Either works. But I would recommend keeping more of your retirement if able. That money will compound and grow.

EconomistVisible2767 · 2024-11-06T17:36:07+00:00

Assuming the house and savings are a 50/50 marital asset...

The 401k isn't cash. It needs to be if she's going to use it for the buyout. The mortgage company will not accept "401K bucks" to pay down the mortgage.

So here's what will happen with the retirement savings. The 401k will be split pre-tax. Her half gets converted into an IRA for her by a process called QDRO. The other half will remain as the original 401k. You should get half of the value, she should get the other half. Both the new IRA (hers) and 401k (yours) will remain a deferred comp plan. As in, it will have most of the properties of a 401k investment.

If she CHOOSES to cash out her half, she'll loose a huge chunk of its value to taxes and early withdrawal penalties. If she's buying you out with that cash, uh oh. She may or may not have enough given taxes and penalties. This may not be immediately apparent to her. She may get the shock of her life in April 2025 when the tax man comes.

Be careful with vesting too. If you're not 100% vested, you'll be splitting phantom money.

Title	House and Retirement Settlement
Author	TonyPlush2
Upvotes	2
Comments	13
Date	November 6, 2024 6:56 AM UTC (1 year ago)
Subreddit	Posted in /r/Divorce_Men
Original Link	https://old.reddit.com/r/Divorce_Men/comments/1gksigs/house_and_retirement_settlement/
Archive Link	https://theredarchive.com/r/Divorce_Men/house-and-retirement-settlement.1534791 https://theredarchive.com/post/1534791

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