401k Loan during divorce

Similar_Tree_8577 · 2023-07-31T20:48:15+00:00

Everything is negotiable. You are asking a question with so little context. If you guys are behaving and being amicable it is probably fine. If you are waging war then no. Ask your lawyer

47omek · 2023-08-01T02:51:38+00:00

My buddy pulled a trick in his divorce with a $50k 401k loan that you need to look out for if you agree to this. He essentially double dipped on the debt. When you take a 401k loan they immediately reduce the 401k balance by the loan amount (50k in his case). So when you pay it back you're really just paying it back to yourself with interest and adding back to your 401k balance. So it's not a true "debt" in that you don't owe it to anyone else. He was able to get his 401k balance (that he had to give half of to his shitty ex) reduced by $50k, and also get his lawyer to add a $50k debt for the 401k loan to his side of the ledger even though in paying it back he was just paying it to himself. So he essentially gained $25k on the 50/50 asset split since her lawyer didn't catch it (or just didn't know). Don't let her classify the $10k as a real debt on her side of the spreadsheet since it's just something she'll repay to herself.

ephemeraltaxidermy · 2023-07-31T23:16:37+00:00

If she doesn't timely repay the loan it is a withdrawal and your married ass is on the hook for the 10% penalty and taxes if you still file joint. I would say if she withholds 20-30% you should be okay but you're not going to be on the phone with Fidelity and she's gonna want the whole 10K in her hand not just 7.

Title	401k Loan during divorce
Author	dak1b2006
Upvotes	3
Comments	6
Date	July 31, 2023 8:41 PM UTC (3 years ago)
Subreddit	Posted in /r/Divorce_Men
Original Link	https://old.reddit.com/r/Divorce_Men/comments/15ergcm/401k_loan_during_divorce/
Archive Link	https://theredarchive.com/r/Divorce_Men/401k-loan-during-divorce.1227235 https://theredarchive.com/post/1227235

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