401k loan

jnuttsishere · 2022-07-14T00:29:08+00:00

401k loans are generally bad news. Avoid like the plague

mpjune69 · 2022-07-14T00:42:29+00:00

That's a tough one - and to clarify - she IS seeking 1/2 of your 401k? Your idea may not be a bad one if you can get away with it - some financial moves are considered pre-emptive in nature especially if the court views it as retaliatory, and can be frowned upon by the presiding judge.

Who have you been with longer, your job or your stbX. Are you 100% vested in the 401k? Every state is different - here's where it "could" bite you. I guess it really depends on the plans' administrator - if the payback of the proposed loan is done via payroll deduction - I'd say that you might as well highlight the payroll deduction in green highlighter - do her attorneys can't miss it. Or you could have stumbled upon gold. Ask your attorney.

But suppose you're keeping the marital home. How's the roof, the AC, windows? Does your state off-set energy improvements? These are all things you were planning to do - before you even looked up d-i-v-o... A......y.

plangelier · 2022-07-14T14:52:43+00:00

We have no joint accounts her credit is pretty trashed.

SilverknightFL · 2022-07-14T00:22:46+00:00

All debts and assets are split, so while the loan debt is split (and deducted from any assets), what you buy with the loan is an asset that will have its value split. So it's a lose/lose. And if it depreciates, it's worse. I did a 401k loan as part of the down payment in her house, but she's liable for half. She exhausted her Roth basis, I used half, so it's all stupid numbers.

Gattsama · 2022-07-14T01:40:34+00:00

Short answer is this is not going to work. Even if her name is not on the titles, all assets and debts occurred during thr marriage are community property. IF you opened your 401k prior to marriage, you can 100% keep what is the account prior to thr marriage, but everything during the marriage is 50% hers.

The best you can do is am unequal distribution in lieu of 50/50 or support. For example: you have $100k assets, $60k debt and $80k in your 401k. So in theory you each would get: +$50 - 30 + 40 = $60k.

However the court doesn't care how you actually get to that number. So you could propose to keep the entire $80k in your 401k in exchange for taking on more debt, giving her more assets, or both. For eg:

Husband: +$80k (401k) - $60k (all debts) + $40k (assets) = $60k

Wife: +$60k assets (no debt and no 401k)

Normally your STBX is agreeable to these unequal distributions because she gets the exact same amount, and we agree because we loss the same amount; but it's logistically easier. In my case we have to sell the martial home, I'm planning to use my equity from thr sell in lieu of alimony, and walk away owing her nothing. So huge payment up front to avoid long term payments down the road.

Bottom line you need to move into acceptance of what the system is. It's created to transfer wealth from the Husband to the wife. You can not change the system or 'win.' Neither your attorney nor hers can change anything. Ultimately in most states what's going to happen in the end is: 50/50 spilt of all assets & debts + spousal support + chuld support & custody/visitation orders.

The goal in divorce is to do this as quickly and cheaply as possible. When either party decides they want to 'fight' shit gets expensive quickly. Normally this is the STBX asking for unreasonable child support / custody or unreasonable assets / alimony. And here's where men get fucked. IF you have the staying power and cash, and you can fight her BS to the bitter in things will balance back out. But most guys run out of money, run out of mental patience, might be fighting false abuse claims, etc etc. So they settle. No one is judging them for that, if your broke, facing possible criminal charges, looking at losing everything, etc settlement is kind of the only way out.

This is why everyone recommends mediation and avoiding attorneys as much as possible if possible. All the do is run up huge bills to get you to the same end result. You only really need them if one party wants to fight (cause you will need one to defend yourself then).

So talk to an attorney, document everything, make an excel file of all know debts, assets and expenses, if you have kids don't move out with a court approved plan, etc. But keep all that on ready, IF she's able to be reasonable try for mediation. Accept you will lose 50% of everything. Work out a fair alimony amount and length (if any). If have kids, agree to 50/50 custody and work out a visitation / residency plan.

Good luck out there...

thedukeinc · 2022-07-14T05:19:03+00:00

Need to read this post next time I even think of marriage. Sorry to hear about this. The system sucks

pegleg_legal · 2022-07-14T10:44:55+00:00

She did save for her retirement - your 401k. Before you monkey around with that and get dinged, it would be a great idea to talk to a lawyer and/or a certified divorce financial advisor, if the amount is substantial. Playing around with the finances, trying to hide things or divert things, is generally not a good idea.

gnackered · 2022-07-14T15:35:00+00:00

So, you are asking if you should hide assets?

If you haven't filed a 401(k) loan would reduce the size of the marital estate. Whatever you bought with the $$$ would presumably increase the size of the marital estate.

Divorce is made of 3 parts CS, alimony and asset split. This only impacts the asset split.

Doing a little math - a 401(k) loan is a max of the lesser of $50K or 50% of the outstanding 401(k) balance - lets assume you have over $100K set aside in the 401(k). So if you borrow it, you reduce the net assets by 50K and you buy 50k of gold and hide those assets. That 50K gets split and you pocket 25K.

Not worth it to me. The real benefit of divorce is you stop the bleeding caused by her spending, your likely rising income differential (feeds alimony amount and CS) and the alimony term (each month adds to the total).

Title	401k loan
Author	plangelier
Upvotes	4
Comments	11
Date	July 14, 2022 12:01 AM UTC (4 years ago)
Subreddit	Posted in /r/Divorce_Men
Original Link	https://old.reddit.com/r/Divorce_Men/comments/vyhufx/401k_loan/
Archive Link	https://theredarchive.com/r/Divorce_Men/401k-loan.1123350 https://theredarchive.com/post/1123350

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